Corus agrees to Tata’s $7.6 billion takeover bid
London, October 20:
In what will be the largest overseas buyout by an Indian company, the Anglo-Dutch steel-maker Corus has agreed to a 4.3 billion pounds ($7.6 billion) takeover bid by India’s Tata Steel.
In a statement early on Friday, the two companies confirmed that they had agreed to a cash offer that valued Corus at 455 pence per share, or a net valuation of 4.3 billion pounds. The deal - which surpasses the net foreign direct investment inflows into India last fiscal year of some $7 billion - will create the world’s sixth-largest steel producer.
The Anglo-Dutch company is ranked the ninth largest steel producer, while Tata is ranked 56th. The merger will quadruple their sales to $23 billion. The top two slots in global steel space are held by Indian-owned entities - Mittal Steel and Arcelor, both of which are in London-based Lakshmi Mittal’s stable.
Tata’s offer will now be placed before Corus shareholders for approval. However, industry analysts believe that the field is now open for counter-offers - most likely from steel majors in Europe, Russia and Brazil.
Corus was formed in the 1990s by the merger of British Steel and the Dutch group Hoogovens. The company employs 47,300 people worldwide and 24,000 in Britain. The move is also the latest salvo by the 138-year-old Tata group - among the top business houses in India with 96 companies in its empire - to spread its wings across the globe in all its seven areas of operations.
Tata Steel had made two major acquisitions over the past two years worth $421 million - those of NatSteel of Singapore in February 2005 and Millennium Steel of Thailand nine months later.