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SUBMITTED TO:

PROF OBEROI

CREATED BY:

AksharaKambli

ShrikantSabat

Sunil Yadav

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TABL OF CONTENT

Sl.no Content Pg. no

1 Int oductionTATA STEEL

CORUS GROUP PLC.

3

2 Prelude 5

3 The De l 6

4 Ti eline 7

5 Fin nci ldet il

REVENUE DETAIL

FINANCIAL REPORT

9

6 Synergy betweenco p nies 12

7

Post- erger 13

8 An lysis 16

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INTRODUCTION

TATA STEEL

Tata Steel formerly known as TISCO and Tata Iron and Steel CompanyLimited,

is the world's seventh largest steel company, with an annual crude steel capacity

of 31 million tonnes. It is the largest private sector steel company in India in

terms of domestic production. Currently ranked 410th on Fortune Global 500, it

is based in Jamshedpur, Jharkhand, India. It is part of Tata Group of companies.

Tata Steel is also India's second-largest and second-most profitable company in

private sector with consolidated revenues of 132,110 crore (US$29.46 billion)

and net profit of over 12,350 crore (US$2.75 billion) during the year ended

March 31, 2008.Tata Steel is the 8th most valuable brand according to an

annual survey conducted by Brand Finance and The Economic Times in 2010.

Its main plant is located in Jamshedpur, Jharkhand, with its recent acquisitions,

the company has become a multinational with operations in various countries.

The Jamshedpur plant contains the DCS supplied by Honeywell.The registered

office of Tata Steel is in Mumbai. The company was also recognized as the

world's best steel producer by World Steel Dynamics in 2005.[11]

The company

is listed on Bombay Stock Exchange andNational Stock Exchange of India, and

employs about 82,700 people (as of 2007).

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THE EAL

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)

"It is a two-way street now, not only India is seeking foreign investment, but

Indian companies areemerging investors in other countries."

Kamal Nath (commerce minister)

The eal et eenTata & C as i iall announcedonApril nd,

at apriceof penceperordinaryshare incash.Thisdeal isa %

acquisitionand thenewentitywill erun yoneofTatassteel subsidiaries.AsstatedbyTata, the initial oti ebehind thecompletionofthedeal wasnot

Corus revenuesi e,but ratheritsmarketvalue.Even though Corus is largerin

si ecompared toTata, thecompanywasvaluedless thanTata at approximately

billion)at the timewhen thedeal negotiationsstarted.

But from Corus point ofview,as themanagement hasstated that thebasic

reasonforsupporting thisdeal were theexpectedsynergiesbetween the two

entities. Corushassupported theTataacquisitiondue todifferent motives.

However,with theTataacquisition Corushasgainedagreat andprofitableopportunity tomakeanexit as thecompanyhasbeen lookingout forapotential

buyerforquitesome time.

The total valueofthisacquisitionamounted to .2billion 2billion).

Tata teelthewinneroftheauctionforCorusdeclaresabidof penceper

sharesurpassed thefinal bidfrom Brazilian teel maker

CompanhiaSiderurgicaNacional CSN)of pencepershare. Priorto the

beginningofthedeal negotiations,bothTataSteel and Coruswere interested in

entering intoanM&Adeal due toseveral reasons.Theofficial pressrelease

issuedbyboth thecompanystates that thecombinedentityw ill haveapro

formacrudesteel productionof27million tonnes in2007,with ,000

employeesacrossfourcontinentsanda joint presence in countries,which

makes it aseriousrival toothersteel giants.

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TIMELINE

September 20, 2006:CorusSteel hasdecided toacquireastrategicpartnership

ithaCompany that isa lowcost producer

October 5, 2006:TheIndiansteel giant,TataSteel wants to fulfil itsambition

toExpand itsbusinessfurther.

October 6, 2006:The initial offerfromTataSteel isconsidered tobe too low

bothby Corusandanalysts.

October 17, 2006:TataSteel haskept itsofferto ppershare.

October 18, 2006:Tatastill doesnt react to Corusand itsbidpriceremains the

Same

October 20, 2006:Corusaccepts termsof .3billion takeoverbidfromTata

Steel

October 23, 2006:The Brazilian Steel roup CSN recruits a leading

investmentbanktoofferadviceonpossiblecounter -offertoTataSteelsbid.

October 27, 2006: Corus iscriticizedby thechairmanof CB,SirAnthony

Bamford,foritsdecision toaccept anofferfromTata.

November 3, 2006:The Russiansteel giant Severstal announcesofficially that it

willnot makeabidforCorus

November 18, 2006:Thebattle over Corus intensifies when Brazilian group

CSNapproached theboardofthecompanywithabidof 75ppershare

November 27, 2006: TheboardofCorusdecides that it is in thebest interest of

itswillshareholders togivemore time to CSN to satisfy thepreconditionsanddecidewhetherit issueforwardaformal offer

December 18, 2006:WithinhoursofTataSteel increasing itsoriginal bid for

Corus to500pencepershare, Brazil s CSNmade itsformal counterbidforCorus

at 515pencepershare incash,3% more thanTataSteel sOffer.

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January 31, 2007:Britain'sTakeoverPanel announces inane-mailedstatement

thatafteranauctionTataSteel hadagreed toofferCorus investors608penceper

share incash

April 2, 2007:TataSteel manages towin theacquisition to CSNandhas the full

votingsupport form Corus shareholders

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Financial Details

REVENUEDETAIL

TOTAL REVENUE USD 5 BILLION

TOTAL REVENUE USD 19.4 BILLION

69%

23%

1% 1%

4%

2%

TATA STEELREVENUE-2005

INDIA

ASIA

U.K

EUROPE

ROW

NORTH AMERICA

0%

8%

28%

54%

3%

7%

CORUSREVENUE-2005

INDIA

ASIA

U.K

EUROPE

ROW

NORTH AMERICA

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COMBINED REVENUE USD 24.4 BILLION

Capa

ity in million tonn

s, R

v

nu

and profits in Rs 000

ror

s

13%

11%

22%44%

3%7%

COMBINED REVENUE-2005

INDIA

ASIA

U.K

EUROPE

ROW

NORTH A

ERICA

118

34 32 31 28.7

204

84.737

61.04548.249

63.871

19.76.455 5.879 8.78 9.702

Arcelor ittal Nippon Steel JFE Steel Posco Tata Steel-Corus

Comparison bas d on fiqur s of2007 -08

Capacity Revenues Profit

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F L REPORT ON DEAL

Equitycontributionof .1billionfromTATASTEELandfullyunderwrittennon-recoursedebt packageof 6.14billion

Equitybasedon 46.7millionfullydilutedsharesofCOR STransactionvaluebasedon B/Sdateof31st March2007,withnet debt of 2.672billion

ExpectedSynergyof 350millionperyearThecompanyexpects to infuseequityof 4.1billiondollar, thebreakofequity isasfollows

1.USD700millionfrom internal generation2.USD500millionofECB3.USD640millionfrom issueofpreferential shares toTATAsons in2006-07and2007-08

4.USD862millionfromright issue to theequityshareholders

5.USD1000millionfromrights issueofconvertiblepreferenceshares

6.USD500millionfromaforeign issueofequityrelatedinstrument

USD2.66billion,whichwill beput Asiansubsidiarieswill bemezzaninedebt,whichwill beremovedaswhenrequired

Theremainingdebt ofclose toUSD6billionwill befundedbythreebankStandard Chartered,ABNAMROandDeutschebank

toTATASTEELUK limited,asubsidiaryspecificallyformed

fortakeover

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Capital Stru

tur

Synergies between the companies Tatawasoneofthelowestcoststeelproducersintheworldandhadself-

sufficiencyinrawmaterial.Coruswasfightingtokeepitsproductions

costsundercontrolandwasonthelookoutforsourcesofironore.

TatahadastrongretailanddistributionnetworkinIndiaandSEAsia.ThiswouldgivetheEuropeanmanufacturerain-roadintotheemerging

Asianmarkets.TatawasamajorsuppliertotheIndianautoindustryand

thedemandforvalueaddedsteelproductswasgrowinginthismarket.

Hence

there

would

be

a

powerful

combination

of

high

quality

developed

andlowcosthighgrowthmarkets

Therewouldbetechnologytransferandcross-fertilizationofR Dcapabilitiesbetweenthetwocompaniesthatspecializedindifferentareas

ofthevaluechain

Therewasastrongculturefitbetweenthetwoorganizationsbothofwhichhighlyemphasizedoncontinuousimprovementandethics.Tata

steel'sContinuousImprovement Program Aspire withthecorevalues:Trusteeship,integrity,respectforindividual,credibilityandexcellence.

Corus'sContinuousImprovement Program TheCorusWay withthe

corevalues:codeofethics,integrity,creatingvalueinsteel,customer

focus,selectivegrowthandrespectforourpeople.

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POST MERGER

Ne Board

Post-mergeranewboardwasformedconstitutingpeoplefromboth

thecompanies theboardwas like this

1.MR RatanTatachairman2.MR imLengwill bedeputychairman3.MR Bmuthuraman, MRIshaat HusainandArun andhi will

join thisboardfromTATASteel

Effect onsharesandcredit ratingTheIndianmarket tookthisdeal positivelyand thesharepricesrose

from372.30on2April 2007onNSE to443.58on10April 2007.

But, the international wasnot soupbeat; Standards & Poors

decreased itsdebt rating to BBB on itsunsecuredbankloan.

CapacityExpansion

AftertheacquisitionofCorusTataSteel isgoingforexpansion in

variouspart ofthecountry,keeping in themind the increasing

demandwithincountry,and iftheplangoeswell it will soon

emergeas2nd

largest Steel produceroftheworld,and itsIndian

branchwill become themost prominent branch in thegroup.

It intends toopennewplants in ChhattisgarhandOrissaand it

intends todouble theproduction inexisting amshedpurplant from

5million tonnes to10million tonnes.It alsowants tohavea

secondplant in harkhandandfeasibilitystudy isunderway thisplant will become the largest plant inIndiaoncompletion.Ifthings

gowell theoverall capacityofTataSteel will growfromcurrent

28.7million tonnes to63million tonnes.

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Futur

Capa

ity in million tonn

s

Curr

nt Capa

ity in million tonn

s

C

ru

,

Tata

teel(Jam

hedpur),

Nat

teel

(

ingap

re),

Millenium teel

(Thailand),

.7

Tata

teel(Jharkhand)),

Tata

teel

Ori

a, 6

C

ru

,

Tata teel

(Jam

hedpur), 5

Nat

teel

(

ingap

re),

Millenium

teel

(Thailand),

.7

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Main compe itors globally

COMPANY CAPACITY (milliontons)

ArcelorMittal 118

Nippon Steel 34

JFE Steel 32

Posco Steel 31

Bao Steel China 23

U.SSteel 19

Nucor Steel 18.5

Riva Steel 17.5

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Analysis

Thisdeal issignificant chapterin thehistoryofIndianbusinessand

TATAgroup; it madeTATASTEELoneofthe leaders in itsfieldand

showcased theeverincreasingmight oftheIndianbusinesses.

Thisdeal hasgivenTATAadirect entry into themarket ofEurope

andU.Kandwill markthebeginningofneweraforIndianbusinesses

on theglobal front. Itsalso important tonote that TataSteelshave

takenoveracompany4 times itsownsizeanddea l whichwill go

downasoneofthe largest deals till the time.Thoughall agree that

TATAgrouphasanuphill taskofconvertingvolumesofCorus into

actual profitsandmayhave todownsize,which theydid immediately

afterthe takeoverand the taskbecameeven tougherassoonafterthe

takeovertheywerefacedwithfirst recessionofthecentury in2008,whichpushed thedemandfurtherdown,but since then thegrouphas

managed theresourceswell.It isstill tobeseenwhethertheambition

ofTATAgroup to becomeaglobal leaderwill besuccessful ornot,

but theyaremakingclearto theworldandonceagainareshowing

path toIndianbusinesshouses, thismessageagainbecameclearer

when they tookoverthe likes AGUARandLAND ROVER.

Talking in technical terms thismergerhasmadeTataSteel the5 th

largest group in termsoftotal capacity.In termsofrevenueandprofitsit isranked3

rdand2

ndrespectivelyandasweall know theTatasare

knownforproducing thebest lowcost Steel in theworld theprofits

aregoing to improvefurther.Strategically thismergerhasgiven the

Tatasabiggermarket toexploreanddirect entry into theEuropean

andU.Kmarkets.Thismergeralsomarksgreatercompetition in the

formofglobal giants likeArcelorMittal NipponSteel etc.Thesegiants

withgreaterresourcesandgreaterexperiencewillprove tobegood

challengeandmotivationforTatasglobal ambition,but whoknows

withfutureexpansionplannedweverywell beseeing it growing intoworldno1brand in itssegment but,still thatsandhighlyoptimistic

viewofthefuture.

Asforthe Corus isconcerned it was thebest deal theycouldhavegot,

at around68% premiumofthere thenexistingcost.Theygot entry

into thedevelopingAsianmarketsandnowhaveaccess tocheaper

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productionmodel andrawmaterialsoftheTATASTEELandwith the

newnameTATASTEELUK theonlyway is thewayforward.

Bibliography

ollowingwebsiteshavebeenveryuseful inproviding in -depth

informationabout themerger

ywww.wikipedia.comywww.moneycontrol.comywww.businesstoday.inywww.Gaurdain.co.ukywww.telegraph.co.uk

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