January 31, 2007, added a shining feather in the cap of corporate Tata Steel which was celebrating its centenary year 2006-07. This day Tata Steel acquired the ninth largest steel producer of the world Corus in an all cash deal of $12.15 billion (around Rs. 55,000 crore) and catapulted itself from the 56th largest steel producer in the world to 6th largest steel producer in the world. It became the largest acquisition by an Indian company and the second largest in the industry after Mittal Steel’s $38.3 billion acquisition of Arcelor. By offering 608 pence per share (pps), which beat a price of Brazilian company Companhia Siderurgica Nacional (CSN) of 603 pps, was 33.6% higher than its original bid. By some measures, it exceeded the price paid in other recent industry deals, such as Mittal Steel’s acquisition of Arcelor last year. In its centenary year of 2007, Tata Steel, a subsidiary of Tata Group - India’s largest private sector company, was aiming to touch the production figure of 7 million tonnes but the acquisition would bring the total capacity of the group to around 23 million tonnes, making it the sixth largest steel producer in the world.
Table of Contents
- Abstract
- Introduction
- Background
- The Indian Multinational in making: Tata Steel
- The European Giant: Corus
Objectives and Key Themes
This case study examines the sustainability and long-term viability of large-scale cross-border acquisitions, specifically focusing on Tata Steel's acquisition of Corus. It aims to provide insights into how emerging market companies expand globally to become multinationals, analyzing both the strategic and financial aspects of such acquisitions.
- Cross-border Mergers and Acquisitions
- Growth Strategies of Emerging Market Companies
- Strategic and Financial Analysis of Acquisitions
- Global Expansion of Steel Companies
- Integration of Acquired Companies
Chapter Summaries
Abstract: This case study explores the challenges and opportunities associated with large-scale international acquisitions, using the Tata Steel-Corus merger as a prime example. It investigates the strategic and financial considerations involved in such deals, offering insights into the complexities of global expansion for emerging market firms. The study relies on secondary data sources, acknowledging inherent limitations in its scope.
Introduction: The introduction highlights the significance of Tata Steel's acquisition of Corus in 2007, marking a pivotal moment in the company's history and propelling it to become a major global player in the steel industry. It emphasizes the substantial financial commitment ($12.15 billion) and the strategic implications of this acquisition, which significantly increased Tata Steel's global production capacity and ranking. The introduction also briefly alludes to the competitive bidding process that led to Tata Steel's successful acquisition of Corus.
Background: The Indian Multinational in making: Tata Steel: This section profiles Tata Steel, detailing its history, financial performance, and strategic objectives. It illustrates Tata Steel's shift from a primarily domestic focus to a global expansion strategy, marked by previous acquisitions in South East Asia (NatSteel Asia, Millennium Steel). The section showcases Tata Steel's vertically integrated business model and its ambition to dominate the high-end steel market segments, particularly in the automotive and construction sectors. It also highlights Tata Steel's commitment to expansion through greenfield projects across various continents.
Background: The European Giant: Corus: This section provides a detailed overview of Corus, the acquired company, focusing on its size, production capacity, global footprint, and organizational structure. It notes Corus's formation through a merger and its subsequent restructuring program (“Restoring Success”), which aimed to improve profitability and efficiency. The section details Corus's substantial production capacity and its major markets, positioning it as a significant player in the European steel industry, further highlighting the implications of its acquisition for Tata Steel's global reach and market share.
Keywords
Mergers & Acquisitions, Acquisitive Growth, Growth Strategy, Globalization, Steel Industry, Tata Steel, Corus, Cross-border Acquisition, Emerging Markets, Strategic Management, Financial Analysis.
Tata Steel Acquisition of Corus: A Case Study - FAQ
What is the main focus of this case study?
This case study examines the sustainability and long-term viability of large-scale cross-border acquisitions, specifically focusing on Tata Steel's acquisition of Corus. It analyzes the strategic and financial aspects of how emerging market companies expand globally to become multinationals.
What are the key themes explored in the case study?
Key themes include cross-border mergers and acquisitions, growth strategies of emerging market companies, strategic and financial analysis of acquisitions, global expansion of steel companies, and the integration of acquired companies.
What companies are central to this case study?
The case study centers on Tata Steel, an Indian multinational, and its acquisition of Corus, a European steel giant. The analysis explores both companies' backgrounds, strategies, and the implications of the merger.
What is the significance of the Tata Steel-Corus acquisition?
The acquisition, valued at $12.15 billion, was a pivotal moment in Tata Steel's history, significantly increasing its global production capacity and propelling it to become a major global player in the steel industry.
What aspects of the acquisition are analyzed?
The study analyzes both the strategic rationale behind the acquisition and its financial implications. It explores the challenges and opportunities associated with large-scale international acquisitions, considering the complexities of global expansion for emerging market firms.
What kind of data is used in this case study?
The case study primarily relies on secondary data sources. The limitations of this approach are acknowledged within the study.
What is included in the "Background" section of the case study?
The background section provides detailed profiles of both Tata Steel and Corus. For Tata Steel, it details its history, financial performance, strategic objectives, and previous acquisitions. For Corus, it focuses on its size, production capacity, global footprint, and organizational structure, including its past restructuring efforts.
What are the chapter summaries provided?
Chapter summaries are included for the Abstract, Introduction, and the two Background sections (Tata Steel and Corus). These summaries provide concise overviews of the key information presented in each chapter.
What are the keywords associated with this case study?
Keywords include: Mergers & Acquisitions, Acquisitive Growth, Growth Strategy, Globalization, Steel Industry, Tata Steel, Corus, Cross-border Acquisition, Emerging Markets, Strategic Management, and Financial Analysis.
What is the overall objective of this case study?
The case study aims to provide insights into the complexities of large-scale cross-border acquisitions, particularly for emerging market companies, offering lessons learned and potential implications for future similar endeavors.
- Quote paper
- Shiv S Tripathi (Author), 2012, Tata Acquires Corus: A case Study, Munich, GRIN Verlag, https://www.grin.com/document/197610
