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 investment, but Indian companies are emerging investors in other countries." Ratan Tata has said he is confident the two companies have “a cultural fit and similar work practices.” Nearly 30 years ago J.R.D Tata had lured away a young engineer from Corus’s predecessor company, British Steel, to work at Tata Steel. That young Sheffield-educated engineer – Sir Jamshed J. Irani (knighted by the