Merger and Aquisition (Tata-Chorus)

Topics: Steel, Corus Group, Steelmaking Pages: 25 (8177 words) Published: March 12, 2011


A report submitted to ISB&M, Delhi Campus as a part fulfillment of Full time Postgraduate Program in Business Management.

Abhishek Kumar
ENR NO.: 1101
Batch: 2005-2007


International School of Business & Media, Delhi
7th Floor, Aggarwal Millennium Tower
Netaji Subhash Place, Wazirpur District Centre,
Pitampura, Delhi 110 034


|Serial No. |Topic |Page No. | | | | | |I |Introduction: M&A | | |II |Industry Overview | | |III |Tata Steel | | |IV |Corus Perspective | | |V |Key Contributors towards Merger | | |VI |TATA-CORUS Merger :Positive Aspects | | |VII |TATA-CORUS Merger: The Negative Aspects | |


M&As are taking place all over the world irrespective of the industry, and therefore, it is necessary to understand the basic concepts pertinent to this activity. The term merger involves coming together of two or more concerns resulting in continuation of one of the existing entities or forming of an entirely new entity. When one or more concerns merge with an existing concern, it is the case of absorption. The merger of Global Trust Bank Limited (GTB) with Oriental Bank of Commerce (OBC) is an example of absorption. After the merger, the identity of the GTB is lost. But the OBC retains its identity. Consolidation or amalgamation involves the fusion of two or more companies and forming of a new company. The merger of Bank of Punjab and Centurion Bank resulting in formation of Centurion Bank of Punjab; or merger of Indian Rayon Ltd, Indo Gulf Fertilizers Limited (IGFL) and Birla Global Finance Limited (BGFL) to form a new entity called Aditya Birla Nuvo is an example of amalgamation. Acquisition is an act of acquiring effective control by a company over the assets or management of another company without combining their businesses physically. Generally a company acquires effective control over the target company by acquiring majority shares of that company. However, effective control may be exercised with a less than majority shareholding, usually ranging between 10 per cent and 40 per cent because the remaining shareholders, scattered and ill organized, are not likely to challenge the control of the acquirer. When the acquisition is ‘forced’ or against the will of the target management, it is generally called takeover. Takeover generally takes the form of tender offer wherein the offer to buy the shares by the acquiring company will be made directly to the target shareholders with out the consent of the target management. Though, the terms ‘merger’, ‘amalgamation’, ‘consolidation’, ‘acquisition’ and ‘takeover’ have specific meanings, they are generally used interchangeably.

Mergers may be
• Horizontal,
• Vertical or,
• Conglomerate.

Horizontal merger is a combination of two or more firms in similar type of production, distribution or area of business. Vertical merger is a combination of two or more firms involved in different stages of production or distribution. Conglomerate merger...
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