Tata Steel after Corus Acquisition
Tata Steel has acquired the 5th largest steel producer of the world, Corus, scoring over Brazil's CSN at $12.15 billion (around Rs 55,000 crore) in cash, making it the largest acquisition by an Indian company and the second largest in the industry after Mittal Steel's $38.3 billion acquisition of Arcelor. Tata's bid of 608p per share, which beat a price from CSN of 603p, was 33.6 per cent higher than its original bid. By some measures, it exceeded the price paid in other recent industry deals, such as Mittal Steel's acquisition of Arcelor last year. In its centenary year of 2007, Tata Steel, a subsidiary of Tata Group, India's largest private sector company, was aiming to touch the production figure of 7 million tonnes but the acquisition would bring the total capacity of the group to around 23 million tonnes, making it the fifth largest steel producer in the world. The group was in look out for big overseas acquisitions as the Indian steel producers have limited-to-no options to jeopardize their bright future by offering its stake to competitors, it would be nothing short of firing at ones own toe, especially when the economy is booming and the potential for steel producers is overwhelming. At 8 per cent of GDP growth, Indian steel producers are expecting a bright future ahead and hence leaves little chance for mergers and acquisitions between two giants from within the country. For 2015, the production target is set at 30 million tonnes. Tata Steel produced about 5 million tonnes of steel the last financial year ending March 2006. Sensing the need, Tata Steel started scouting for overseas presence through greenfield or brownfield projects early this century. The company's global journey began with the announcement of its greenfield ferro chrome plant in South Africa in 2003 at Richards Bay as the possible location. The major aim of this plant was to procure raw material for its India-based stainless steel plant.... [continues]
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