India poised for global supremacy

M&A

An aspect of corporate strategy corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly.

Tata steel Tata Steel has established by Indian Parsi Businessman

Jamsetji Tata. 'Tata Steel', formerly known as TISCO (Tata Iron and

Steel Company Limited), was the world's 56th largest and India's 2nd largest steel company with an annual crude steel capacity of 3.8 million tonnes.

Tata played a vital role in the improvement of steel

production also. For that reason in the development of India’s economy.

Corus steel• Corus Group plc was formed on 6th October 1999,through the

merger of two companies, British Steel and Koninklijke Hoogovens.

• Headquarters in London, • Its core business : manufacturing, development and allocation

of steel and aluminum products and services.

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Strategizing growth

• “There are not many opportunities for producers in emerging low-cost markets to gain access to the markets of Europe other than by acquiring a company like Corus,”

John Quigley (Editor, Industry Publication Steel week)

Hence… India’s first Fortune 500 MNC was born

The Deal• This deal is a 100% acquisition

• The new entity will be run by one

of Tata’s steel subsidiaries.

• As stated by Tata, the initial motive

behind the completion of the deal was not Corus’ revenue size, but rather its market value.

• Corus is larger in size compared to Tata, the company was valued less than Tata (at approximately $6 billion) at the time when the deal negotiations started.

Reasons for TATA Steel to Bid

• Tap the European Market.• Helped TATA feature in the top ten players

of the world.• Technology benefit.• Economies of scale.• Leverage

• “It’s a tremendous strategic acquisition. I believe this will the first step in showing that Indian industry can in fact step outside the shores of India in an international marketplace and acquit itself as a global player”

• A chance to bail out of debt and financial stress.

• Access to lower cost resources.• Corus had a high cost of production.• Low profit margin.

Reasons for Corus to be sold

Synergies Cost benefits

Emerging Growth

Technology transfer and cross fertilization of R&D

Strong culture fit 

Addressing the cross cultural concerns

Tata Steel approached the Corus acquisition with full awareness of the concerns that might arise due to cultural and racial obstacles caused by British employees resentful of having managers from India.

Ascending in the global market• Judging from the reaction of the popular press in India,

Tata Steel’s acquisition of Corus was hailed as a bold and visionary move.

• This acquisition did a lot to bolster the confidence levels Indian firms to seek overseas targets.

• Financial performance: The share price reflected the positive sentiment (rose up by 27% on BSE in 2007)

• S&P upgraded its ratings and changed it into “Positive Outlook”.

Thus, it became one of the largest players globally.

Our take

• We believe that the acquisition of Corus has been timely.

• Given the rising momentum of consolidation in the industry and rising valuations of steel companies, had Tata Steel not acted when it did, the opportunity could have been lost forever.

Bibliography

• Tatasteeleurope.com• Financial expess• Economic times• Ximb.ac.in

Thank you!!!!!