Corus accepts Tata sale

The Corus board will recommend the bid by Tata Group which values the company at 4.3 bn pounds.

The deal will secure access to Tata’s supply of iron ore, which could be used to make production in Britain more economical. This may be necessary to compete with an Arcelor-Mittal which may have almost free Iron ore from Liberia.

Tata will benefit by access to the European market for it’s cheap steels, Tata having won many awards for the most economical production.

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7 Responses

  1. This shows the ambition of the Tata Group, and the merger really is very clever move for both parties. I am now intertested about how the two entities can be merged across all levels.

    Corus profit after taxation in 2005 was 451 million pounds, from 18 million tonnes of steel, the deal values the company 4.1 billion pounds (4100 million pounds) (25 pounds profit / tonne). Corus also carries a debt of 1 billion pounds.

    Tata profit after taxation was 37.3 billion ruppes (approx 470 million) making 5 million tonnes (94 pounds / tonne). However Tata Steel is backed by the bigger Tata Group.

  2. It would be interesting how TATA STEEL reacts if Brazilian steel company CSN launches a counter bid. This is going to come as per the press report in BBC on 22nd October. I personally feel this deal between TATA and Corus would benefit both the companies, specially, Corus. Corus is going to get the cheap height quality iron ore from India and also would be able to take advantage of well established sales network of TATA STEEL in India, which is an emerging market. There are reports that job cuts will be made, but probably that is inevitable even if Corus runs alone or for that matter choose any other partner.

    I strongly believe that TATA should not pay a single penny more to buy Corus (more that 455p/share) – that will be a burden. Corus comes with many “pluses” but also with some terrible “minuses”. £1 billion debt and 48,000 employees are certainly going to be a big burden on TATA’s shoulder. If CSN wants to buy Corus with a bigger offer let them do it and let Corus shareholders take a decision. There is hardly any company in the whole world, which is having a better record in social responsibility than TATA STEEL. So everyone should understand that TATA might pay somewhat less money to buy Corus but the interest of shareholders and workers would be best maintained under their ownership.

  3. If another bidder makes a higher offer the shareholders will accept it since Tata Steel are proposing to buy the shares with CASH rather than shares in the merged company. As such many of the shareholders will not have any financial interest in the new company or in the welfare of the employees of the new company. Any companies that hold shares in Corus will be legally (and maybe morally) obligated to get the best deal for their own shareholders (this is almost always measured, simply, in cash however right or wrong we feel that is).

    I think it would be unusual to offer the highest bid you are prepared to pay straight away, that way you will never know if you could have got a better deal.

    I think Tata steel are getting a good deal here, I hope they have the imagination to invest more in the manufacturing in the United Kingdom, so that they can benefit from highly skilled Corus workers aswell as the technical staff.

  4. Brazilian firm CSN are making a rival bid for Corus. See BBC report on the story. In 2002 CSN were involved in a failed merger with Corus, when Corus bid £2.7bn for CSN. CSN have bid £4.3bn compared to TATA Steels bid of £4.1bn.

    The deal will presumably give the Corus plants access to Brazilian Iron ore through CSN, Brazil being a major producer of high quality Iron ore.

    It is estimated that worldwide there are 800 billion tons of iron ore resources, containing more than 230 billion tons of iron.

  5. […] The deal between Tata and Corus has finally been agreed. A price was decided today in an auction between Corus and CSN. […]

  6. The deal between the Corus and TATA has been reached thanks to to the great leadership of Ratan Tata who guided TATA STEEL in this acquisition. I commented before in this blog that TATA Steel should not pay more that what it has initially offered to buy Corus (455p / share). However after listening to Mr. Ratan Tata and Mr. Muthuraman I am sure this deal is going to be benificial for both the companies in future, even though TATA had to pay more (608 p/share) at the end.
    We all in TATA steel knew that Mr. Ratan Tata is a great leader and a man of principle. We are also aware of his love for cars and aeroplane. In fact he is a trained pilot himself. But I never knew he is going to fly a F16 fighter jet at the age of 69. See this link:
    http://www.hindustantimes.com/news/5922_1919944,0015002500000000.htm

    How many CEOs would dare??

  7. Mr Ratan Tata—-

    Na bhuto Na bhavisyati!!!

    Simply great

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