Celebratory chorus

Whenever the history of Corporate India's coming of age is written, Tata Steel's acquisition of Corus will figure as a landmark event. It is the largest overseas acquisition by an Indian company, by a mile and then some. It took daring and imagination to make the first move, and a steely nerve to see the battle through when it became a competitive landscape. Tata, already the fifth-largest in the world for medium and heavy trucks (helped by the acquisition of Daewoo's truck unit a couple of years ago), will now also be the world's fifth-largest producer of steel. The group also becomes the first Indian multi-product business house of consequence to be truly international, in that something like half its business will now be outside the country""and it goes without saying that Tata-Corus will have to be run as an international company, from the board level down. In many ways, the elements of this story carry with them the different facets of the transformation of India's manufacturing sector. Every Indian manufacturing company will now feel a little taller.

But corporate acquisitions are about cold calculations, though animal spirits might play their part. The stock market's response to Tata Steel's aggressive bidding to pocket Corus, in a night that seems to have been full of drama, should remind everyone that winning an auction is not the end of the process, only the beginning. There is, first, the question of whether Tata paid too much""given that the final price is a third higher than the opening bid, and bearing in mind that the Corus share price has doubled in the last year or so. Implicit in the question is whether this is one more manifestation of the winner's curse. The truth is that no one knows the answer, which depends fundamentally on how the steel market evolves over time and whether steel prices stay buoyant. A variety of scenarios can be drawn up. While it would be foolish to pretend that there are no risks, if one takes the realistic line that emerging economies like China and India will continue to power along, with the requirements of such economies for infrastructure, auto production and construction, it becomes reasonable to conclude that steel demand will stay buoyant; in that context, all that Tata-Corus has to do is to ensure cost efficiencies and being well represented in all parts of the steel market.

Second, there is the task of integrating the two businesses; the Tata Steel managing director has talked of how the deal will save it money in various ways, and there will be several operational advantages when businesses are dovetailed. There is also the strategic advantage gained, in that such opportunities do not come up very often. If there are sceptics around when it comes to the downstream business issues, they should draw confidence from the success that the Tata group has had with its other overseas acquisitions""Tetley among them.

Finally, Ratan Tata deserves to be complimented on re-building his group on sound foundations so that it can take on the balance sheet stress of swallowing and absorbing a large acquisition. The restructuring of the group, done over years of effort, has therefore paid dividends. Mr Tata is also acquiring a reputation for taking long bets""this is a good time to recall that he ignored all the sceptics when he went into car manufacture, for instance.