Sep 20, 06 : CORUS uses the strategy to work with low cost producer. Oct 06, 06 : Initial offer by TATA is considered to be too low. Oct 17, 06: TATA kept its offer to 455 pence per share. Oct 20, 06 : CORUS accepts the offer of £4.3 billion. Oct 23, 06 : Brazilian Steel Group CSN counter-offer to TATA’s offer. Oct 27, 06 : CORUS criticized by JCB for acceptance of TATA’s offer. Nov 18, 06 : The CSN approaches Corus With an offer of 475 pence per share Nov 27, 06 : Board of Corus decides to give more time for shareholders to decide whether it issue forward a formal offer. Dec h18,06 : Tata increases its original bid for Corus 500 pence per share, then CSN made its counter bid at 515 pence per share in cash Jan 31, 07 : Tata ad agreed to offer Corus investors 608 pence per share in cash Apr 02, 07 : Tata steel manages to win acquisition to CSN and has the full voting support from Corus shareholders
TATA Acquired CORUS on 2nd April 2007 which is 4 times larger than its size. The deal price was $ 12 Billion. TATA Steel,the winner of the auction for CORUS declares a bid of 608 Pence per share. In 2005 when the deal was started the price per share was 455 pence. TATA Surpassed the final bid from Brazilian steel maker ‘COMPANHIA SIDERURGICA NACIONAL’ (CSN) of 603 pence per share. The combined entity has become the world’s fifth largest steelmaker after the deal. For this deal TATA has finance only 4 Billion $ from internal company resources. TATA Have secured funding commitments from its advisors. These advisors were Deutshe bank, ABN Amro and Standard Chartered.
FOR TATAThe initial motive behind the deal was not CORUS revenue size but rather its market value.To compete on global scale because then TATA was just at 56th rank in steel production.CORUS holds a number of Patents and R & D facility. Acquiring Corus will give Tata access to European customers of steel.Acquisition cost will be lower then setting up new green field plants and marketing channel.
To extend its Global reach through TATA.To get access to Indian Ore reserves, as well as virgin market for steel.To get access to low cost materials.Total Debt of Corus was GBP 1.6bnSaturated market of Europe.Better facilities and lower cost of productionEmployee cost was 15 % (TATA- 9%)Profit margin was 3.4% (TATA- 17%)
Biggest merger in the history of Consumer goods P&G acquired Gillette for $57b to become the world’s largest consumer goods company Annual Sales of the combined entity:$60.7b After purchase of Gillette P&G will have $21b brands with market cap of $200b P&G paid .975$/share(20% premium),later buyback of shares worth $18-22b over 12-18 months
Merging companies: similarity in Corporate history Merger based on a different model where innovation was the focus rather than the scale Regulatory concerns: Product overlaps Consumer goods after 1980s
P&G strength: Women’s personal care products Gillette strength: Men’s grooming category Complementary in strength cultures and vision to create potential for superior sustainable growth Gillette stock climbed 50% since 2003,profits jumped on premium products Acquisition added about 20% to P&G sales, long term sales growth estimate to 5-7% a year Operating margin expected to grow by 25 % by 2015 from 19% in 2003 The companies expected cost savings of $14-16 bn from combining back-room operations and new growth opportunities.
more resources to enable intensive collaborative supply chain initiatives in a more cost-effective way. merger would also bring down the advertising and media costs owing to greater bargaining power Opportunities in developing markets: Gillette would give exposure to P&G in emerging economies like India and Brazil, while P&G would distribute Gillette products in China It will give P&G the much needed boost to further strengthen its product categories where at present it has negligible presence The deal will help Gillette in improving its inventory days.
The merger would result in around 6,000 job cuts, equivalent to 4% of the two companies combined workforce of 140,000. Most of the downsizing will take place to eliminate management overlaps and consolidation of business support functions. Cultural problems absence because of geographical proximity P&G is considered a promote-from-within company, and already had a lot of executive talent at the top. Therefore, absorbing Gillettes management to their satisfaction could be difficult P&Gs ability to handle this massive cultural assimilation would decide the success or failure of this acquisition. Overlaps of some brands