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    MMA

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    Tata Steel acquired Corus, which was four times its size, in the largest ever overseas acquisition by an Indian company. After failed merger talks between Corus and CSN in 2002, Tata Steel made an initial cash offer of 455 pence per share for Corus in 2006, sparking a bidding war with CSN. Tata Steel ultimately prevailed with a final bid of 608 pence per share in January 2007, making it the 5th largest global steel producer but also causing its own shares to fall over 10% on the announcement. While some criticized the deal, Tata Steel believed an all-cash offer was necessary to immediately take control and was more attractive to Corus shareholders than a stock swap.

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    MMA

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    Tata Steel acquired Corus, which was four times its size, in the largest ever overseas acquisition by an Indian company. After failed merger talks between Corus and CSN in 2002, Tata Steel made an initial cash offer of 455 pence per share for Corus in 2006, sparking a bidding war with CSN. Tata Steel ultimately prevailed with a final bid of 608 pence per share in January 2007, making it the 5th largest global steel producer but also causing its own shares to fall over 10% on the announcement. While some criticized the deal, Tata Steel believed an all-cash offer was necessary to immediately take control and was more attractive to Corus shareholders than a stock swap.

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    Tata Steel acquired Corus, which was four times its size, in the largest ever overseas acquisition by an Indian company. After failed merger talks between Corus and CSN in 2002, Tata Steel made an initial cash offer of 455 pence per share for Corus in 2006, sparking a bidding war with CSN. Tata Steel ultimately prevailed with a final bid of 608 pence per share in January 2007, making it the 5th largest global steel producer but also causing its own shares to fall over 10% on the announcement. While some criticized the deal, Tata Steel believed an all-cash offer was necessary to immediately take control and was more attractive to Corus shareholders than a stock swap.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    75 views5 pages

    MMA

    Uploaded by

    adtyshkhr
    Tata Steel acquired Corus, which was four times its size, in the largest ever overseas acquisition by an Indian company. After failed merger talks between Corus and CSN in 2002, Tata Steel made an initial cash offer of 455 pence per share for Corus in 2006, sparking a bidding war with CSN. Tata Steel ultimately prevailed with a final bid of 608 pence per share in January 2007, making it the 5th largest global steel producer but also causing its own shares to fall over 10% on the announcement. While some criticized the deal, Tata Steel believed an all-cash offer was necessary to immediately take control and was more attractive to Corus shareholders than a stock swap.

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    Tata and Corus Deal

    History of the deal


    Year 2002 Event CSN and Corus planned an all-shares merger Eventually deal broke up. Sept, 2006 5th Oct,2006 Decided to join hands with low-cost steel producer. Tata Steel made an offer of 455 pence a share in cash for entire shareholding . Deal Value: US$7.6 billion Corus agreed to takeover CSN made a counterbid with a price of 475 pence per share Tata Steel revised price to 500 pence per share

    20th Oct, 2006 18th November, 2006 18th December, 2006

    History of the deal


    18th December, 2006 CSN made counter bid of 515 pence per share Corus approved this deal to meet its strategic needs Deadline set by Takeover Panel to make their final offer

    30th January, 2007

    31st January, 2007

    Auction held Tata Steel won the auction with final bid of 608 pence per share Corus share rose by approx. 7% to 602 pence on the London Stock Exchange. Tata shares fell by Approx. 11% to Rs. 464 on BSE

    Features
    Tata Steel acquired Corus, which was four times its size and largest steel producer in the U.K. It is now 5th largest steel maker by capacity It is Indias largest ever trans-border acquisition Leveraged Buyout Market was harsh about the deal. Short term view was considered

    Why Cash Deal


    A really confident acquirer will tend to pay for the acquisition by cash and the markets historically have been rewarding this confidence by responding through rise in share value, a stock buy out could (almost certainly) take the opposite direction if they sense that the stock is Overvalued. The cash buyout also makes sure that its shareholders do not give up any merger gains to the acquired companies shareholders. Immediate takeover was required Share swap deal would have been less attractive to Corus Shareholder. Share swap deal may diluted the Tata Steel share base which was not in favor of Tata Steels share holder. Cost of acquisition Debt i.e.8% was less than cost of equity i.e.15%. Share swap deal means FDI & lot of regularity which might have not been accepted by Corus Shareholders.

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