Tata Corus

TATA & CORUS: A Case of Acquisition

“There are not many opportunities for producers in emerging low-cost markets to gain

access to the markets of Europe other than by acquiring a company like Corus,”

John Quigley (Editor, Industry Publication Steel week)

Thousands of Indians didn’t offer prayers for Tata Steel to clinch the deal for the AngloDutch steel maker Corus, as they have for the recovery of hospitalized Bollywood

superstars. Nor did they erect 40-foot billboards of a smiling Ratan Tata, chairman of

Tata Steel, after he won Corus. And the stock markets were clearly concerned about the

Tata Steel’s new debt load. But despite all this, euphoria gripped the nation. Finance

minister P. Chidambaram offered unspecified help, if needed, to close the deal; fellow

steel magnate Lakshmi Niwas Mittal cheered the acquisition, and excited TV

newsreaders gushed. India’s first Fortune 500 MNC was born.

Tata acquired Corus, which is four times larger than its size and the largest steel producer

in the U.K. The deal, which creates the world's fifth-largest steelmaker, is India's largest

ever foreign takeover and follows Mittal Steel's $31 billion acquisition of rival Arcelor in

the same year. Over the past five years, Indian companies had made global acquisitions

for over $10 billion. The Tata bid almost equals this amount. Most of them have averaged

$100 to 200 million.

"It is a two-way street now," Kamal Nath (Commerce Minister, India) said.

"Not only India is seeking foreign investment, but Indian companies are

emerging investors in other countries."

Ratan Tata has said he is confident the two companies have “a cultural fit and

similar work practices.” Nearly 30 years ago J.R.D Tata had lured away a

young engineer from Corus’s predecessor company, British Steel, to work at

Tata Steel. That young Sheffield-educated engineer – Sir Jamshed J. Irani

(knighted by the Queen 10 years ago) – was Tata Steel’s managing director

until six years ago....