| TOP TEN GLOBAL STEELMAKERS | ||
| Rank | Company Name | Capacity |
| 1 | Arcelor-Mittal (Luxembourg) | 109.7 MT |
| 2 | Nippon Steel (Japan) | 32.0 MT |
| 3 | Posco (South Korea) | 30.5 MT |
| 4 | JFE (Japan) | 29.9 MT |
| 5 | Tata-Corus (India) | 23.8 MT |
| 6 | Baosteel (China) | 22.7 MT |
| 7 | US Steel (USA) | 19.3 MT |
| 8 | Nucor (USA) | 18.4 MT |
| 9 | Riva (Italy) | 17.5 MT |
| 10 | ThyssenKrupp (Germany) | 16.5 MT |
The purchase is the second-biggest in the world steel industry behind Mittal Steel's $38.3 billion takeover of Arcelor SA last year.
Credit Suisse Group, JPMorgan Cazenove and HSBC Holdings Plc advised Corus. NM Rothschild & Sons, Deutsche Bank AG and ABN Amro Holding advised Tata.
Although the task was not easy, the mood was optimistic since yesterday, hours before the auction began in London. Tata, at the company's board meeting yesterday to consider the third quarter results, was believed to have told his collegues that the entire world was looking at the Corus deal.
"This acquisition is Ratan Tata's gift to the shareholders on the eve of the centenary celebrations of the company," an industry observer said.
The acquisition, however, did not come through easily for the Tatas who had announced a 455 pence offer in October, which was later revised to 500 pence per share. CSN outbid the revised Tata offer with a bid of 515 pence. With the competitive situtaion continuing, the UK Takeover Panel put it on auction.
In a hurriedly called press conference today, Tata Steel chairman Ratan Tata said the aquisition marked the end of a journey that started "some time ago."
" Tata Steel, an Indian steel company, now has a global scale and a footprint in Europe. It would have taken several years for us to build a 19 million-tonne capacity,'' Tata said.
The senior management of Corus will remain with the company, he said. CEO Philippe Varin would work with Muthuraman to apply synergies between the companies. The acquisition is expected to be over by March.
The Corus board has backed Tata's offer, the U.K. company said in a regulatory filing. Shares of Corus rose 7% to 603 pence on the London Stock Exchange, valuing the steelmaker at about $11 billion.
The Tata Steel stock fell almost 11 per cent to Rs 463.95 on the Bombay Stock Exchange. Tata said the markets were taking a "short-term and harsh view" .
Investors in London were happy with the price. Standard Life Investments, which holds 7.89%, told Business Standard: "We would like to thank the Corus Management team and employees, particularly Phillippe Varin, for delivering the recovery that made this bid possible. Tata have now paid a fair price. We are happy with the outcome."
On an enterprise value basis, the price represents a multiple of approximately seven times EBITDA from continuing operations for the year ended December 31, 2005, and a multiple of nine times EBITDA from continuing operations for the 12 months to September 30, excluding the non-recurring pension credit of 96 million pounds. Mittal's offer for Arcelor was 4.46 times the Luxembourg-based company's earnings.
The full synergies of the deal would be felt in the third year. B Muthuraman, managing director, Tata Steel said, "When we start supplying semi-finished products, we will realise the full synergies," said Muthuraman. The synergies would help the combined entity to save $350 million a year.
Muthuraman said Tata Steel would contribute $4.1 billion in equity for Tata Steel UK through which the acquisition will be routed, and which won't affect the Tata Steel shareholders. The balance would be funded by debt, he said but did not give details. The debt would be serviced from the cash flows of Corus.
"The price won't affect our ability to complete announced projects, pay dividends and service loans," Muthuraman said.
Corus was created through the merger of British Steel and the Netherlands' Royal Hoogovens in 1999.