TATA STEEL - CORUS

8/7/2019 TATA STEEL - CORUS

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Presented by:

TEAMGEORGE BERNARD SHAW


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TATA STEEL Tata steel formerly

known as TISCO and it is

the sixth largest steelcompany, with an annualcrude steel capacity of 31million tonnes.

It is the largest privatesector steel company inIndia in terms ofdomestic production.


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Cont Ranked 258th on Fortune Global 500, it is based in Jamshedpur,

Jharkhand, India.

Tata Steel is also India's second-largest and second-most profitablecompany in private sector with consolidated revenues of Rs 1,32,110crore and net profit of over Rs 12,350 crore during the year endedMarch 31, 2008.

The company is listed on Bombay Stock Exchange and

National stock Exchange of India, and employs about82,700 people (as of 2007).

Tata Steel has set an ambitious target to achieve a capacityof 100 million tonne by 2015.


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Cont1. 6 million tonne plant in Orissa (India)

2. 12 million tonne in Jharkhand (India)

3. 5 million tonne in Chhattisgarh (India)4. 3-million tonne plant in Iran

5. 2.4-million tonne plant in Bangladesh

6. 5 million tonne capacity expansion at Jamshedpur(India)

7. 4.5 million tonne plant in Vietnam.


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CORUS The London-based Corus

Group is one of the world'slargest producers of steel andaluminium. Corus was formedin 1999 following the merger ofDutch group KoninklijkeHoogovens N.V. with the UK's

British Steel on October 6,1999. It employs 47,300 peopleworldwide and 24,000 peopleintheUnited Kingdom.


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Cont. Corus is a customer focused, innovative value-driven

company, which manufactures, processes and distributessteel products and services to customers worldwide.

Corus is Europe's second largest steel producer with annualrevenues of around 12 billion and a crude steel productionof over 20 million tonnes.

It is listed on the London Stock Exchange, EuronextAmsterdam and the New York Stock Exchange.

Corus has four divisions: strip products division, longproducts division, distribution and building systemsdivision, and aluminium division. Corus has an annualturnover of $18 billion.


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OVERVIEW OF THE COMPANYTATA STEEL

Steel Founded 1907 Headquarters Jamshedpur, Jharkhand,

India. Key people Ratan Tata (Chairman)

B Muthuraman(Managing Director)

roducts Hot and cold rolledcoils and sheetsWire and rodsConstruction barsPipes

Structuralsand forgingquality steel. Revenue US$32.77 billion

(2009) Total Assets $31.16 billion

(2009) Employees 86,548 (2009)

CROUS Steel Founded Koninklijke

HoogovensN.V. in 1918British SteelCorporation in 1967Merger of British Steel& KoninklijkeHoogovens 1999

Headquarters London, England, UK Key people Kirby Adams,

CEOMarjan

Oudeman, Steel Revenue 10,142 million (2005) Operating Income 680 million

(2005) Net Income 451 million (2005) Employees 50,000


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Merge Deal The board of directors of Anglo-Dutch steelmaker Corus has

accepted a $7.6 billion takeover bid from Tata Steel, the two sidesconfirmed on Friday.

The deal is the largest Indian takeover of a foreign company andwill create the world's fifth-largest steel group. In 2005, Tata Steel was only the world's 56th biggest steel

producer and its takeover of Corus represents its first expansionoutside Asia.

"The board has recommended Tata Steel's offer. We are hopeful

that the shareholders will accept it," David Jackson, director(communications) of Corus, told CNBC-TV18 news channel onFriday.

Tata Group chairman Ratan Tata also confirmed that it hasagreed to acquire the European steel company at 455 pence pershare, putting the enterprise value of Corus at about $10 billion.


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Cont "This proposed acquisition represents a defining moment for Tata Steel

and is entirely consistent with our strategy of growth throughinternational expansion," Tata said.

Jackson said the deal comes at the "right time and at the right price"

and expressed hope that shareholders as well as trade unions wouldrespond positively to the offer.

As per the agreement, 75 per cent of Corus shareholders would have totender their shares for the acquisition to be complete.

"The combined entity will have a turnover of $32 billion by 2011-12 withan EBIDTA margin of 25%," Muthuramansaid.

He also discussed the six-pronged strategy outlined by Tata Steel in2003 where the target was to increase capacity from 4 million tonnethen to 30 million tonne by 2015.

The $8 billion Tata Steel-Corus deal would be at No 5 among the topdeals witnessed by the steel industry over the last couple of years.


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y September 20, 2006 : Corus Steel has decided to acquire astrategic partnership with a Company that is a low costproducer

y October 5, 2006 : The Indian steel giant, Tata Steel wants tofulfill its ambition to Expand its business further.

y October 6, 2006 : The initial offer from Tata Steel isconsidered to be too low both by Corus and analysts.

y October 17, 2006 : Tata Steel has kept its offer to 455p pershare.

y October 18, 2006 : Tata still doesnt react to Corus and its bid

price remains the same.y October 20, 2006 : Corus accepts terms of 4.3 billiontakeover bid from Tata Steel

y October 23, 2006 : The Brazilian Steel Group CSN recruits aleading investment bank to offer advice on possible counter-offer to Tata Steels bid.

NEGOTIATION BY TATA


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Financing of the Dealy TATA- CORUS Deal - $12 billion

y Equity Contribution from Tata Steel- $3.88 billion

y

Credit Suisse leaded, joined by ABN AMRO andDeutsche Bank in the consortium.

y Of the $ 8.12 billion of financing , Credit Suisse provided45% and ABN AMRO and Deutsche provided 27.5%each.


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Major Acquisitions Big Deals

TARGET BUYER VALUE($bn) YEARArcelor Mittal Steel 31 2006

NKK Corp Kawasaki Steel 14.1 2001

LNM Holdings Ispat Intl 13.3 2004

Tata Corus 12 2006

Krupp AG Thyssen 8.0 1997

Dofasco Arcelor 5.2 2005

Intl Steel Mittal Steel 4.8 2005


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ACQUISITION

y TATA-CORUS

y Tata acquired Corus, which is four times larger than its size and thelargest steel producer in the U.K. The deal, which creates the world'sfifth-largest steelmaker, is India's largest ever foreign takeover andfollows Mittal Steel's $31 billion acquisition of rival Arcelor in thesame year.

y Tata acquired Corus on the 2nd of April 2007 for a price of $12

billion. The price per share was 608 pence, which is 33.6% higherthan the first offer which was 455 pence.


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POST MERGE OF THE COMPANY:y Tata was one of the lowest cost steel producers in the world and had

self sufficiency in raw material. Corus was fighting to keep itsproductions costs under control and was on the look out for sources ofiron ore.

y Tata had a strong retail and distribution network in India and SE Asia.This would give the European manufacturer a in-road into theemerging Asian markets.

y Tata was a major supplier to the Indian auto industry and the demandfor value added steel products was growing in this market. Hence there

would be a powerful combination of high quality developed and lowcost high growth markets

y There would be technology transfer and cross-fertilization of R&Dcapabilities between the two companies that specialized in differentareas of the value chain


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First 100 Days: Conflict Points

y Time Factor

y

Leadership style differencesy Whos in charge? (Who won?)

y Open vs. closed communication

y Decision making speed & style


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FINANACIAL ANALYSIS

Particulars Corus Currency: TATA Steel Ltd Currency

Year 2006 2005 2006 2005

ASSETS 582750.00 533925.00 205,450.70 177,033.10

DEBTS 98100.00 105525.00 45,932.70 42,073.10

LIABILITIES 231300.00 178425.00 30492.10 33146.80

REVENUE 760500.00 699900.00 202,444.30 159,986.10

NET INCOME 33900.00 33450.00 37,346.20 36,032.60


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CONCLUSION:y With Corus in its fold, Tata Steel can confidently target

becoming one of the top-3 steel makers globally by 2015.The company would have an aggregate capacity of closeto 56 million tones per annum, if all the plannedGreenfield capacities go on stream by then.

y We can conclude that if the acquisitions well planned ,Executed and the necessary precautions taken for the

deal a company can achieve its strategic objectives andthus ensure its growth through Acquisition.


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THANKING YOU..

TATA STEEL - CORUS

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