...A PROJECT TO STUDY Acquisition OF TATA AND CORUS 0BY Jigar Gandhi Roll No- 11 PGDM - 4TH semester INTRODUCTION –( MERGERS AND ACQUISITION ) In this changed business paradigm only those organization rule who visualize the possibilities before they appear as plausible. Present Business environment, characterized by the globalization and liberalization, accommodates organization that are coming up with innovative strategies to survive and flourish. Companies in the global economies climate are thriving to each the pinnacle of the successes seeking competitive edge of over their rivals. While the waves liberalization and deregulation have been shaking the corporate shore around the global the domestic organizations are falling prey to the fierce competition and unprecedented challenges carried by this emerging business scenario. The recessionary trend consequents to the wall Street tsunami has made for the organization a maze with no exit . Drowning in the luxury of producing goods only to keep life simple is suicidal, rather an un quenched thirst must always prevailing that makes the quest for the value sustainable. Existence of keen competition with number and volume also made the texture of the competitor stronger shock absorber both finally and strategically creating a wide exposure for the business enterprises to build armour for protecting themselves from the threats lying in and forthcoming from the environment. Thus, organizations are left with...
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...Tata Group is following policy of growth strategy based on Mergers & Acquisitions. So, Corus takeover is a part of a whole series of mega acquisitions in diverse areas since 2000. Tata Steel's acquisition of Corus of the UK clearly reinforces the strategic logic dictating `consolidation' in the highly fragmented steel industry. The historic merger of Arcelor and Mittal Steel laid the foundation for this deal. For Tata Steel, which has been pursuing inorganic growth in the Asian region for a while, the move into Europe appears to go well with its strategy of global growth. Tata steel chose the equity mode to enter the European market. Equity mode or Foreign Direct Investment is the principle way in which firms enter and compete in the modern global economy. Acquisition is the part of FDI. The acquirer inherits the company’s strategic assets (managerial, technological, and marketing resources), without having to build them from scratch, as would be the case when setting up overseas operations through Greenfield investment. Increasingly, acquiring strategic assets have become a motivation for OFDI from emerging economies Tata have chosen Acquisition for many reasons. Some of these reasons can be explained by theory, while others not. Now we will discuss the prime motives that encourage Tata to adopt aggressive Acquisition policy while entering European Steel Market. The main advantages to Tata by choosing Acquisition are as follows: Economy of scale: This acquisition...
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...TATA-CORUS MERGER * The Tata Steel's bid for Corus Steel, the first multi-billion dollar bid for an overseas company, is considered as a landmark case in Indian corporate history. * The Tata Steel's interest in acquiring Corus is in line with its growth objective of entering new, higher end markets and acquiring sophisticated customer base. * Enhanced scale have positioned the combined group as the fifth largest steel company in the world by production and have created vertically integrated global steel company with crude steel output of more than 23 Million Tonnes. * The company would required support of half of the shareholders present at the meeting and 75% of shares in value. * Cost concerns forced Corus to search for a strategic partner. Tata steel is the world's lowest cost producer of steel, while Corus's cost of production is almost twice that of Tata Steel. The deal was finalized on the 31st of January 2006 at an extraordinary general meeting held by Corus. * The climate at the time of Tata’s acquisition of Corus was characterized by an “eat-or-beeaten” mentality in which steel companies increasingly had to decide whether to be an acquirer or an acquisition target. These mergers and acquisitions were expected to eventually result in a handful of worldwide global giants in the steel industry. Merger and acquisition activity in the world steel industry was likely to result in a higher degree of pricing stability and better margins for the steel...
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...Case Study analysis TATA-CORUS:- Q.1. What are the benefits of the TATA-CORUS merger deal to the stakeholders of TATA Steel and the stakeholders of CORUS? Evaluate the post-merger security with the help of CAPM Model. A.1. On January 31st, 2007 India’s Tata Steel acquired Corus, the erstwhile British Steel Major at a price of 608 pence per Corus share totaling $12.1 billion/ Rs 54,000 crore/ £6.1 bn, which was five pence per share higher than the offer of Brazil’s CSN (Companhia Siderugica Nacional). The deal is the largest Indian takeover of a foreign company, and creates the world's fifth-biggest steel company from the present 56th rank. Benefits of TATA-CORUS merger deal to the stakeholders of TATA Steel Short-Term Implications Investors with a one-to-two year perspective may find the Tata Steel stock unattractive at current price levels. While the potential downside to the stock may be limited, it may consolidate in a narrow range, as there appears to be no short-term triggers to drive up the stock. The formalities for completing the acquisition may take three to four months, before the integration committees get down to work on the deal. In our view, three elements are stacked against this deal in the short run: 1) Equity dilution: The financing of the acquisition is unlikely to pose a challenge for the Tata group, but the financial risks associated with high-cost debt may be quite high. Though the financing pattern is yet to be spelt out fully, initial...
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...TATA & CORUS: A Case of Acquisition “There are not many opportunities for producers in emerging low-cost markets to gain access to the markets of Europe other than by acquiring a company like Corus,” John Quigley (Editor, Industry Publication Steel week) Thousands of Indians didn’t offer prayers for Tata Steel to clinch the deal for the AngloDutch steel maker Corus, as they have for the recovery of hospitalized Bollywood superstars. Nor did they erect 40-foot billboards of a smiling Ratan Tata, chairman of Tata Steel, after he won Corus. And the stock markets were clearly concerned about the Tata Steel’s new debt load. But despite all this, euphoria gripped the nation. Finance minister P. Chidambaram offered unspecified help, if needed, to close the deal; fellow steel magnate Lakshmi Niwas Mittal cheered the acquisition, and excited TV newsreaders gushed. India’s first Fortune 500 MNC was born. Tata acquired Corus, which is four times larger than its size and the largest steel producer in the U.K. The deal, which creates the world's fifth-largest steelmaker, is India's largest ever foreign takeover and follows Mittal Steel's $31 billion acquisition of rival Arcelor in the same year. Over the past five years, Indian companies had made global acquisitions for over $10 billion. The Tata bid almost equals this amount. Most of them have averaged $100 to 200 million. "It is a two-way street now," Kamal Nath (Commerce Minister, India) said. "Not only India is seeking foreign...
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...TATA & CORUS: A Case of Acquisition “There are not many opportunities for producers in emerging low-cost markets to gain access to the markets of Europe other than by acquiring a company like Corus,” John Quigley (Editor, Industry Publication Steel week) Thousands of Indians didn’t offer prayers for Tata Steel to clinch the deal for the AngloDutch steel maker Corus, as they have for the recovery of hospitalized Bollywood superstars. Nor did they erect 40-foot billboards of a smiling Ratan Tata, chairman of Tata Steel, after he won Corus. And the stock markets were clearly concerned about the Tata Steel’s new debt load. But despite all this, euphoria gripped the nation. Finance minister P. Chidambaram offered unspecified help, if needed, to close the deal; fellow steel magnate Lakshmi Niwas Mittal cheered the acquisition, and excited TV newsreaders gushed. India’s first Fortune 500 MNC was born. Tata acquired Corus, which is four times larger than its size and the largest steel producer in the U.K. The deal, which creates the world's fifth-largest steelmaker, is India's largest ever foreign takeover and follows Mittal Steel's $31 billion acquisition of rival Arcelor in the same year. Over the past five years, Indian companies had made global acquisitions for over $10 billion. The Tata bid almost equals this amount. Most of them have averaged $100 to 200 million. "It is a two-way street now," Kamal Nath (Commerce Minister, India) said. "Not only India is seeking foreign...
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...SAHARA INDIA AND FORCE INDIA New Delhi: Sahara Group chairman Subrata Roy acquired a 42.5% stake in Force India, the Formula One team owned by liquor baron Vijay Mallya, for $100 million. Sahara Group’s Subrata Roy. By Abhijit Bhatlekar/Mint The sale of new shares to Roy will bring Mallya’s stake in Force India down to the same level—42.5%. Force India will be renamed Sahara Force India and Roy will take over as the chairman of the company, while Mallya will continue to be the principal and managing director of the team that is now ranked sixth in the constructor’s championship with 48 points. “No shareholders sold stakes and the entire $100 million will go to the team,” Mallya said. “This partnership will enable the team to invest in technology. There is no scope for any other stakeholder to come in, but we are open for sponsorships.” Mallya said he approached Roy and the deal was completed in record time. The decision to sell the stake will help Mallya, who owned 75% of Force India before Roy’s investment, infuse funds into the racing team as he struggles to turn around other companies controlled by him, including Kingfisher Airlines Ltd. The development comes weeks after Mallya said Kingfisher Airlines will exit the low-fare segment that will do away with the Kingfisher Red unit. The capital-starved Kingfisher Airlines, which hasn’t made a profit since its inception in 2005, had debt of Rs 7,057.08 crore as on 31 March. It posted a loss of Rs 1,027 crore on sales of...
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...House of Tata – Acquiring a Global Footprint Group 1 Bhuvan Bajaj Karan Bahl Raki Jain Trivikram Apte Vinayak Pareek Yan Yan Huang House of Tata – Acquiring a Global Footprint Executive Summary What and how did TATA emerge as a Multi Brand? Founded in 1868 by Jamshetji N. Tata as a trading firm Textiles in 1874 India’s first luxury hotel in 1903 First private steel company in 1907 First airline in 1932 First software firm in 1968 Liberalization of the Indian Economy and the changes that it brought to TATA’s way of doing business Ratan Tata becomes chairperson in 1991 • • First objective: Streamline group portfolio Some groups diversified and others organized around seven sectors 2 Major global expansions In 2000, Tata groups started internationalized operations and 65% of collective revenues were expected to come from outside India 1. Tata Consultancy ServicesWhy TCS, the group’s tech and consulting giant underwent its evolution at a much faster rate than the other Tata companies, in a sense became more global. And they perceived more growth in the foreign market and had to expand globally, TCS accounted for $27.8 billion of Tata’s $59.5 billion market capitalization as of August 2007 2. TitanExpanded globally but suffered high losses thus established itself as an NRI brand, especially in the Middle East. 3. Indian Hotels Company – TAJ Hotel Group Began globalization in 1982, Tata purchased 51 Buckingham gate and St. James court hotel which was later branded as...
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...Strategic Management Report on Case 2: Tata Steel Table of Content Company Overview……...….…..……….………………………. 1 Problems & issues company faced ……………………………… 3 Probable Solutions…………... … ………………………………. 4 Compnay Overview Tata Iron and Steel Company was established by Dorabji Tata on August 25, 1907, as part of his father Jamsetji's Tata Group.By 1939 it operated the largest steel plant in the British Empire. The company launched a major modernization and expansion program in 1951. Later in 1958, the program was upgraded to 2 Million metric tonnes per annum (MTPA) project.By 1970, the company employed around 40,000 people at Jamshedpur, with a further 20,000 in the neighbouring coal mines.In 1971 and 1979, there were unsuccessful attempts to nationalise the company.In 1990, it started expansion plan and established its subsidiary Tata Inc. in New York. The company changed its name from TISCO to Tata Steel in 2005. After then Tata Steel Limited (formerly Tata Iron and Steel Company Limited (TISCO)) constructed their headquartered in Mumbai, Maharashtra, Based in Jamshedpur India, and a subsidiary of the Tata Group. It was the 12th largest steel producing company in the world in 2012, with an annual crude steel capacity of 23.8 million tons, and the 2nd largest private-sector steel company in India (measured by domestic production) with an annual capacity of 9.7 million tons and the world’s 56th largest company. Post Corus merger, Tata Steel was India’s second-largest...
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...Case Analysis – House of Tata: Acquiring a Global Footprint Explain what are any problems or challenges by four major Tata’s businesses; Tata hotel, Tata tea, Tata Steel, and Tata Motor, and justify the solutions for success in business management. Overall, those three Tata’s businesses have commonly objective to increase potential growth of marketing competitiveness, while to broaden management to be higher level of international-scale operation. To be sorted out by each department, Tata’s tea Due to being three times the size of Tata Tea, different economic scale of Tetley becomes a concern distracting firm manager overly focused on acquisition. This proposition corroborated according to the case is that “the senior management of Tetley was virtually unchanged after acquisition2” because the firm was trying to relieve complexity generated after acquisition. Thus, Tata’s tea could better restructure management temporarily from acquisition with supplemented Tetley’s tea to be leveraged buyouts due to managerial mistakes. Which is Tata tea management emphasized on product quality improvement in the long term by focusing on value-added, branded tea, and sales presence in advanced market rather than benefits of shareholders1. This can be noticed from the case that “Tata Tea limited its equity contribution to an amount that we could service on our own without any returns coming for a period of time even though not yet hurt Tata Tea shareholder2. This consequence...
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...Strategy Transnational Strategy Multi-domestic Strategy Global Integration High Low National Responsiveness High Low Quadrant 1 – Global Strategy, High requirement for integration and low awareness of differentiation. Based on price competition, entry strategy used it often mergers and acquisition. Quadrant 2 – International Strategy. Low requirement for centralised quality check and strategic decision making eliminating the need to adapt to individual countries. Mixed strategy combining low demand for integration and responsiveness. Quadrant 3 – Transnational Strategy. High requirement for integration and differentiation. Emphasizing both global integration and local responsiveness. Quadrant 4 – Multi-domestic Strategy. High requirement for differentiation but low concern for integration. Emphasize on local adaption. 2.1 ANALYSIS Adaption from the Case Studies and Research Cases Tata Group uses two different strategies locally and internationally when dealing with its businesses. Local businesses under Tata Group’ umbrella uses the Domestic Strategy which requires product differentiation base on the local adaption. Such example is the Tata Nano Car and the Tata Ace...
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...Group Submission on a Case House of Tata: Acquiring a Global Footprint Submitted by: - Submitted to:- Abhigyan Prof. Vinay Chirania Dipandita Kar Himali Kulshrestha Mridul Tiwari Priyanka Aggarwal Subhashree Roy Vaibhav Singh Summary of House of Tata: Acquiring a Global Footprint The 134-year-old Tata Group with 95 operating companies (31 of them publicly traded) and 230,000 employees, it is India's largest private-sector employer, its biggest taxpayer, and its greatest foreign-exchange earner. It operates India's one of the largest private steel manufacturer, its largest chain of luxury hotels, and its largest private power utility” (Ellis, 2002). Tata Group is one of India's most prominent and esteemed business groups. Tata Group's cite is substitutable with India's industrialization. The Group dedicated The India her first steel plant, hydroelectric plant, inorganic chemistry plant and produced a reservoir of scientific and technological workforce for the nation. Today, Tata Group constitutes 96 functioning companies in seven business sectors such as, information systems and communications, engineering, materials, services, energy, consumer products, and chemicals. The Group has operations in more than 54 countries across six continents, and its companies export products and services to 120 nations. The Tata family of companies, shares a set of five core values: integrity, understanding, excellence, unity and responsibility Tata Group has played a...
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...Cross-border Merger and Acquisition A merger is characterized as the union of two associations into a single organization. An acquisition is the purchase of one association from another when the acquirer keeps up the control. There are local M&As and cross-border M&As. Local M&As are directed inside the same country, while cross-border M&As involve two companies from two different countries. A cross-border M&A is characterized as activity in which an enterprise from one country purchases the entire resource or controlling rate of an enterprise in another country. Mergers and acquisitions (M&As) are a basic part of the corporate rebuilding handle, and have created an unlimited scholarly writing in the course of recent decades. (Mulherin & Audra L. Boone, 2000) Cross-border mergers and acquisitions (M&As) have expanded significantly in the course of the last two decades. Given this fast increment, completely understanding the determinants and ramifications of mergers and acquisitions has been high on the plan for both strategy producers and scholastics. (Hijzen & Holger , 2006) Figure [ 1 ]: Three Stages of Cross-Border M&A The process of acquiring an enterprise has three common elements: 1. Identification and valuation of the target 2. Completion of the ownership change transaction 3. The management of post-acquisition transition The management of post-acquisition transition The merger amongst Tata and JLR appeared...
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...ase study of Tata Motor Acquisition of Jaguar and Land Rover You are Here: Home > Management Case Studies > Case study of Tata Motor Acquisition of Jaguar and Land Rover According to industry analysts, some of the issues that could trouble Tata Motors were economic slowdown in European and American markets, funding risks, currency risks etc. Acquisition of Jaguar and Land Rover provides the company with a strategic opportunity to acquire iconic brands with a great heritage and global presence, and increase the company’s business diversity across markets and product segments.- Tata Motors, in April 2008. “If they run the brands as a British company and invest properly in new product, it will be successful because they are still attractive brands.”- Charles Hughes, Founder, Brand Rules LLC, in 2008. “Market conditions are now extremely tough, especially in the key US market, and the Tatas will need to invest in a lot of brand building to make and keep JLR profitable.”- Ian Gomes, Global Head, Emerging Markets, KPMG, in 2008. Acquisition of British Icons On June 02, 2008, India-based Tata Motors completed the acquisition of the Jaguar and Land Rover (JLR) units from the US-based auto manufacturer Ford Motor Company (Ford) for US$ 2.3 billion, on a cash free-debt free basis. JLR was a part of Ford’s Premier Automotive Group (PAG) and were considered to be British icons. Jaguar was involved in the manufacture of high-end luxury cars, while Land Rover manufactured high-end...
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...A PROJECT REPORT ON (“A STUDY ON COST COMPARISON ANALYSIS OF TATA STEEL AND ITS COMPETITORS”) SUBMITTED TO MAEER’s MIT SCHOOL OF BUSINESS BY (SOURAV GHOSH HAZRA) 322346 32ND Batch IN PARTIAL FULFILLMENT OF POST GRADUATE DIPLOMA IN MANAGEMENT (PGDM) Finance APRIL-MAY 2015, MAEER’s MIT SCHOOL OF BUSINESS PUNE CONTENTS Chapter No. Title Page No. Declaration from the Student Certificate from the Organization iv Certificate from the Guide v Acknowledgement vi List of Tables vii List of Graphs viii List of Abbreviation ix Executive Summary I iii x INTRODUCTION 1 – 11 1.1 Company profile 1.2 Objectives of the Study 12 1.3 Limitations of the study 12 II RESEARCH METHODOLOGY 2.1 Primary data 13 2.2 Secondary data 13 2.3 Sample design 13 2.4 Sample Size 13 2.5 Method of Data Collection 14 III THEORETICAL BACKGROUND 3.1 Data analysis Techniques IV DATA PROCESSING AND ANALYSIS 25 – 45 V MANAGEMENT LESSONS 46 - 49 VI FINDINGS 50 VII RECOMMENDATIONS 51 VIII CONCLUSION 52 Bibliography Annexure/Appendices 15 – 24 24 DECLARATION I, Mr. SOURAV GHOSH HAZRA hereby declare that this project report is the record of authentic work carried out by me during the period from 7th April to 2th June and has not been submitted to any other University or Institute for the award...
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