Idea and Vodafone Merger

1. CORPORATE RESTRUCTURING
ANDVALUATION
Mehta Chaitya N. [187500592061]
Mehta Esha N. [187500592062]
Parmar Namrata K. [187500592074]
Parajapati Payal [187500592082]
Rajput Sejal K. [187500592088]
Shah Purva D. [187500592097]

2. HISTORY OF TATA STEEL
 Tata Steel is a part of the Tata Group, one of the largest diversified business conglomerates in
India.
 In 1907, Jamshedji Tata established Tata steel at Sakchi in West Bengal. The company was
producing 70,000 tons of steel per year.
 Tata Steel was one of the main suppliers of steel required for manufacturing shells and armored
cars.
 With the liberalization in the Indian economy in early 1990s, Tata Steel's business grew rapidly
to become the Asia's first and India's largest integrated steel producer in the private sector.
 Tata Steel acquired the Singapore-based steel manufacturer NatSteel Limited.
 To strengthen its position further in the Asian steel industry, Tata Steel acquired the Thailand-
based Millennium Steel in December 2005.
 These acquisitions not only helped Tata Steel to strengthen its position in major Asian markets
but also provided it with an additional customer base for 2 million tonnes of steel.

4. 03
HISTORY OF CORUS
 The company was established at ljmuiden, a town on the North Sea coast with good access inland vis
North Sea Canal.
 Varin and Jim Leng, the chairman of Corus, both worked to revive the company's business. They
were able to cut costs to the tune of £600 million and reduced losses from £404 million in 2002 to
2255 million in 2003.
 From April 2003 onwards, the share price moved up and it stood at 390 pence before the bid by Tata
Steel In 2006, Corus reported an annual turnover of £9.7 billion but with a much lower PBT of 1313
million.

5. 04
TATA- CORUS DEAL
• Tata acquired Corus on 2nd April 2007
• The deal price was US $ 12.11 Billion
• On 17th Oct 2006 Tata bid was priced at 403 pence per share (Market
Price per share at that time was 390 pence)
• Tata Steel winner of the auction for Corus declares a bid of 608
pence per share
• Tata surpassed the financial bid from Brazilian Steel Maker –
COMPAHNIA SIDDERUGGICA NACIONAL (CSN) – of 603
pence per share

6. FORM OF CORPORATE RESTRUCTURING
 It was horizontal acquisition of Corus by TATA Steel. TATA Steel
is from Steel industry and had acquired Corus which was also from
steel industry, thus TATA Steel has acquired the company operating
in same business,so it is horizontal acquisition by TATA.

7. APPLICATION OF PORTER’S FIVE FORCE MODEL

8. REASONS FOR THE DEAL:
 Reasons for Tata steel to bid:
 To tap European mature market
 Cost of acquisition
 Tata steel to feature in top 10 players in the world
 Corus holds number of patents and R&D facilities
 Increase market power
 lower risk
 Reasons from Corus to accept the Tata bid:
 To extend its global reach
 Favorability of shareholders
 Access to low cost
 Cost of production
 Though Corus has revenues of $18.06bn, its profit was just $626mn

9. BENEFITS OF BOTH THE PARTIES AND DISADVANTAGE
 BENEFITS:
 TATA Steel Group rose to 5th position from 56th, this helped Tata to achieve its goal of getting on top 10 list, thus one
of the greatest benefit it this.
 The production capacity of merged company has increased from 4 million tones to 28 million tones by 2011. This
helped both the company to become more powerful and large.
 Even Standard & Poor’s Rating cut it credit Rating to BB from BBB and removed them from the negative watch list.
 Due to Strong Research & Development Unit of Corus, this made research and development smoother for Tata Steel.
 Tata Corus can have diversified presence at different parts of world.
 Due to acquisition both company can get access to the each others customer, results into Large Customer base and
further larger revenues.
 DISADVANTAGE:
 Despite all the benefits there were some concerns about the outcome and effects of the deal,
 It was felt that Corus EBITDA at 8% was much lower than that of TATA Steel which was 30% in year 2006-07.
 It was also felt that after the Corus deal TATA Steel no longer remain the lowest-cost producer of steel in the world.
 Tata Steel’s captive iron reserves in India would last for about 50 years if one were to consider the company’s pre-
acquisition annual production capacity of 5.3 million tonnes of steel. However, the iron reserves remain for much
shorter period with the TATA Corus production capacity of 27 million tonnes of steel per annum. Further more, Corus
did not have any access to any iron ore or coal reserves.

10. CONCLUSION:
 TATA steel acquisition of CORUS was a bold and smart move. Complementarities in scale, market
geography, financials, technology and raw materials offered a strong rationale for the deal
 The acquisition of CORUS has been timely done. Given the rising momentum of consolidation in the
industry and rising valuations of steel companies, had TATA steel not acted when it did, the opportunity
could have been lost forever.
 Thus, the acquisition was a success for both the company.

11. BIBILOGRAPHY:
 https://www.business-standard.com/company/tata-steel-
566/information/company-history
 https://www.academia.edu/23275074/A_CASE_STUDY_OF_TA
TA_AND_CORUS_MERGER
 https://casemba.com/vivek-gupta/tata-steels-acquisition-of-
corus/porters-analysis.php