How Did Tata Steel Acquisition Corus

The case of Tata Steel acquiring Corus throws up several interesting questions on emerging multinationals and traditional multinationals in the steel industry and particularly the complexities of the acquisition in the above context. What has been surprising in the above case is that how could a small steel maker, Tata Steel from a developing country like India buy up a large steel company, Corus PLC from the United Kingdom. Prior to the acquisition, Corus was four times bigger than Tata Steel. However, the operating profit for Tata Steel was $840 million (sale of 5.3 million tonnes), whereas in case of Corus it was $860 million (sale of 18.6 million tones) in the year 2006. It is also interesting to find out why a large global steel maker, Corus decided to sell itself off to a small steel maker from a developing country.
Many questioned if the Tatas were wise in acquiring Corus that had accumulated huge debt burden, made operational losses and whose share price had drastically come down. The
An Indian corporate or group company acquiring a business in Europe or the U.K. seemed possible only in the realm of fantasy. In addition to these issues, Indian companies in general have had huge liabilities of origin in term of poor quality, service and reliability in the international markets. At the same time many the global steel industry was getting restructured from a large number of smaller steel makers to a fewer large steel conglomerates through the worldwide mergers and acquisition. The steel companies in India were also wondering on how to go about in these circumstances. In the above context, how did the top management of Tata Steel and the Tata Group perceive the acquisition of Corus? When Tata Steel began bidding higher price on Corus plc, many wondered how the Tatas manage the huge financial deal and whether it will be good for the financial health of Tata Steel