The Hindu : Front Page : Tatas acquire Corus Group

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Saturday, Oct 21, 2006
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Tatas acquire Corus Group

Hasan Suroor

The £ 4.3 billion deal is the largest Indian takeover of a foreign company Jim Leng: Right partner at the right time and on right terms

SEALING A DEAL: Managing Director of Tata Steel B. Muthuraman (left) with Chairman of Tata Sons Ratan N. Tata, and Corus Group Chairman Jim Leng and Chief Executive Phillippe Varin at a media conference in London on Friday after Tata's takeover of t he Corus Group. — Photo: AP

LONDON: Excited Indian voices reverberated through the corridors of Deutsche Bank's London headquarters on Friday morning as beaming Tata Steel executives celebrated their company's acquisition of the Anglo-Dutch firm Corus Group in a deal that would create the world's fifth biggest steel company.

The £ 4.3 billion (Rs. 36,650 crore) deal, the culmination of hard negotiations over months, represents the largest Indian takeover of a foreign company and Tata Steel's first expansion outside Asia.

"Defining moment"

Ratan N. Tata, Chairman, Tata Sons, hailed the acquisition as a "defining moment" for his company and consistent with its strategy of growth through international expansion.

"It is a very exciting moment for both companies because the deal pulls together two companies which have a similar global vision," he said, announcing the deal at a press conference soon after Corus confirmed the takeover.

Mr. Tata stressed that Corus would retain its identity in the "foreseeable future" and remain an Anglo-Dutch company with the existing management structure.

In a brief, unemotional speech, Mr. Tata sought to clear the air, which in recent weeks has been thick with speculation, that it was "not an opportunistic, agenda-driven" deal but was built on a shared vision of a "global strategy."

"Corus and Tata Steel are companies with long, proud histories. We have compatible cultures of commitment to stakeholders and complementary strengths in technology, efficiency, product mix and geographical spread. Together we will be even better equipped to remain at the leading edge of the fast changing steel industry," he said.

For B. Muthuraman, managing director of Tata Steel, who had been personally involved in the negotiations, the agreement had a special flavour. He spent the morning explaining its finer points, first to an array of domestic and international analysts, and then to a cynical media.

He said Tata Steel had been in the forefront of steel industry for 99 years and the deal reflected its commitment to remain at the cutting edge of the new global market. It was a step towards greater global consolidation of the steel industry.

Mr. Muthuraman sought to allay fears of job losses at Corus as a result of the takeover and planned cost-cutting. He said the threat to jobs would have been greater had the deal not taken place.

"The deal makes it more competitive and that means more job security," he said, though he did not rule out redundancies in future.

Right partner

Jim Leng, Chairman of Corus, described Tata Steel, which it chose over companies from Brazil and Russia, as the "right partner at the right time and on the right terms." He said: "This creates a well-balanced company, strategically well-placed to compete in an increasingly competitive global environment." The deal, he explained, was prompted by his company's decision to seek access to low-cost production and high-growth markets.

Analysts welcomed the acquisition, but some warned that it could trigger a takeover "war." Tata executives, however, vigorously shook their heads.

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