Global rating agency Standard & Poor's today put its BBB long-term corporate credit rating of Tata Steel on credit watch with negative implications following the acquisition of the UK-based Corus Group PLC.This follows the UK Takeover Panel's announcement on the completion of the auction procedure between Tata Steel and Companhia Siderurgica Nacional (CSN) of Brazil for the takeover of Corus, the rating agency said in a release.The BBB ratings were placed on credit watch on October 18, 2006 after Tata Steel's initial bid for the second largest steelmaker of Europe at 455 pence per share. The bid was revised to 608 pence per share today."The size of the acquisition and the potential cash outflow in Tata Steel's offer for Corus could have an adverse impact on its financial risk profile," said S&P credit analyst Anshukant Taneja."In addition, the company could face challenges related to the integration and improvement of Corus' comparatively weaker business profile," he added.He, however said, a successful acquisition can potentially improve the business profile of the merged entity by giving the company access to new product and market segments and prominence in the rapidly consolidating global steel industry.At the same time, the rating agency retained its BBB foreign currency rating on Tata Steel's senior unsecured bank loans of $750 million and $500 million on credit watch with negative implications.
