Case Study Of Tata Steel

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Tata Steel acquired Corus Group in April 2007 for £6.2bn. Tata Steel is India’s largest private sector steel company with 2005/06 revenues of US$5.0 billion and crude steel production of 5.3 million tons across India and South-East Asia. Corus Group is Europe's second largest steel producer with annual revenues of over £9.2 billion and a crude steel production of 18.2 million tons in 2005. This is an interesting acquisition as the acquired company was almost four times the size of the acquirer in terms of revenue. The combined entity became the fifth largest steel company in the world. The acquisition allowed Tata Steel entry into the European market. This deal follows the merger of Arcelor-Mittal forming world’s largest steel company. It is…show more content…
On 17 November, CSN offered 475 pence. In response, Tatas upped the bid to 500 pence a share. Then CSN raised the bid to 515 pence a share. As the bidding war heated up, UK Takeover Panel decided to auction the company on 30/31 January. In a nail-biting finish for the seven-hour long bidding war, the Tata group won offering 608 pence a share, 34 percent higher than its original bid. The total payment was $12.1 billion (Rs 53,580 crore at the then exchange rate), of which $6 billion was debt. The Acquisition is proposed to be made by Tata Steel U.K., a wholly-owned indirect subsidiary of Tata Steel, recently incorporated in the United Kingdom for the purpose of completing the…show more content…
In 2014-15, the share was down to 57.3 percent. While Tata Steel group witnessed a 6 percent growth in turnover over the period, Tata Steel Europe saw a 20 percent decline in turnover. Clearly, Tata Steel Europe has been a drag on the group. As far as operating profit is concerned, Tata Steel group saw a decline of 30 percent between 2007-08 and 2014-15. Tata Steel Europe, meanwhile witnessed a sharper 53 percent decline. In 2007-08, a year before the global financial crisis started, the foreign subsidiary had a 50 percent contribution to overall Ebitda. The business never went back to that level of operating profit after that. The share in 2014-15 stood at 33.6 percent. In 2015-16 up to December, the group's consolidated EBITDA stood at Rs 11,165 crore. Tata Steel Europe, meanwhile, reported an operating loss of Rs 339
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