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Submitted to:Prof.

Narayan Baser Financial Management II

Submitted by:Group 2 E&I (7 to 12)

Introduction
Established in 1907 56th Largest in World 3.8 Million Ton Capacity Present in 26 Nations 82700 Employees Established in 1999 through Merger 10th Largest in World 18.2 Million Ton Capacity Present in 50 Nations 40000 People all over world

Rationale behind Deal


To tap mature European market. To be in Top 10 Technological benefits. For patents and R&D facilities. Cost of acquisition is lower than setting up of Green field plant & marketing and distribution channel. TATA manufactures Low Value, long and flat steel products ,while Corus produce High Value Stripped products. To extend its Global reach through TATA. To get access to Indian Ore reserves, as well as virgin market for steel. To get access to low cost materials. Saturated market of Europe. Decline in market share and profit.

SYNERGIES EXPECTED FROM THE DEAL


Tata was one of the lowest cost steel producers & Corus was fighting to keep its productions costs under control. Tata had a strong retail and distribution network in India and SE Asia. Hence there would be a powerful combination of high quality developed and low cost high growth markets Technology transfer and cross-fertilization of R&D capabilities. There was a strong culture fit between the two organizations both of which highly emphasized on continuous improvement and Ethics. Economies of Scale. Increase in profitability. Backward integration for Corus and Forward integration for Tata Steel.

DEAL TIMELINE
September 20, 2006 Corus Steel has decided to acquire a strategic partnership with a Company that is a low cost producer October 5, 2006

The Indian steel giant, Tata Steel wants to fulfill its ambition to Expand its business further The initial offer from Tata Steel is considered to be too low both by Corus and analysts Tata Steel has kept its offer to 455p per share.
Tata still doesnt react to Corus and its bid price remains the same. Corus accepts terms of 4.3 billion takeover bid from Tata Steel Brazilian Steel Group CSN recruits a leading investment bank to offer advice on possible counter-offer to Tata Steels bid Corus is criticized by the chairman of JCB, Sir Anthony Bamford, for its decision to accept an offer from Tata. The Russian steel giant Severstal announces officially that it will not make a bid for Corus The battle over Corus intensifies when Brazillian steel company CSN launched a counter offer for Corus at 475 pence per share, valuing it at $8.4 Billion. Tata preemptively upped the offer to 500 pence (the Revised Tata Acquisition). Other than the increased offer price, the Revised Tata Acquisition was subject to the same terms and conditions as set out in the original offer. Within hours of Tata Steel increasing its original bid for Corus to 500 pence per share, Brazil's CSN made its formal counter bid for Corus at 515 pence per share in cash, 3% more than Tata Steel's Offer Britain's Takeover Panel announces in an e-mailed statement that after an auction Tata Steel had agreed to offer Corus investors 608 pence per share in cash Tata Steel manages to win the acquisition to CSN and has the full voting support from Corus shareholders

October 6, 2006

October 17, 2006

October 18, 2006

October 20, 2006

October 23, 2006

October 27, 2006

November 3, 2006

November 19, 2006

December 10, 2006

December 18, 2006

January 31, 2007

April 2, 2007

TATA Steel Stock

Post-merger integration
Tata Steel formed a seven-member integration committee to spearhead its union with Corus group. Head of the committee : Ratan Tata, Three Tata Steel members: B Muthuraman (MD) T Mukherjee (Deputy MD (steel) Kaushik Chatterjee (CFO) Three Corus members: Phillipe Varin (CEO ) David Lloyd (executive director (finance) Rauke Henstra (division director (strip products) Several Taskforce Teams to ensure integration specific activities. Organizational structure for Group Strategy Function : Strategy Development, Strategic Modelling, and Industry Group.

Situation now
Tata Corus is the fifth largest steel maker in the world. Tata Steel Stocks have experienced 21 per cent absolute gain since February 2007. Fall in steel production in UK every year since 2007 . The more competitive operations in the Netherlands have fared better, with output staging a recovery in 2010 itself, with production this year up another 10 per cent. Indian operations produce less than half of the steel volumes that European operations produce but accounted for 60 to 96 per cent of the company's total profits between FY08 and FY11. In FY10, Indian businesss Rs 5,000-crore reported net profits went a long way in stemming the red-ink resulting from the European operations consolidated losses of over Rs 2,000 crore. Net sales between FY08 and FY11 fell from Rs 131,000 crore to Rs 118,000 crore.

Situation now Contd.


Adjusted net profits slipped from Rs 7,359 crore to Rs 6,560 crore over the same period. Sale of its unprofitable three-million-tonne-a-year Teesside Casting operations for a bargain price of about $700 million. A range of other assets has also been sold off including Corus' aluminium and chemical businesses. The India operation's gross debt has moved from Rs 18,000 crore in FY08 to Rs 28,000 crore at the end of FY11. Cash from its rights offer earlier this year, issue of hybrid instruments and the sale of various assets, the company has seen consolidated net debt:equity moderate from 1.44 in FY08 to 1.2 during the most recent quarter ended June 2011. In an attempt to insulate the European arm from volatile input costs, Tata Steel had to make additional investments in the past five years invested in iron ore and coking coal mines in Canada, Africa and Australia. On May 13th 2013 Tata Steel announced a $1.6 billion impairment, mainly of its takeover of Corus.

Thank You