Tata, Corus BoDs approve 4.3 bln pound takeover bid

London, Oct 20 (UNI) The Tatas are set to become the world's fifth largest steel-makers with the acquisition of Europe's second largest steel producer Corus Group for 7.6 billion dollars, making it the biggest-ever all cash deal by an Indian company overseas.

The deal, offering 455 pence per share, has been approved both by UK's Corus Board as also the Board of Directors of Tata Steel and is expected to be completed by mid-Janaury 2007.

The value of the bid is based on earnings of Corus, primarily engaged in the manufacture of semi-finished and finished carbon steel products. The UK-based comapny earned revenues of 9.2 billion pounds in 2005 and registered crude steel production of 18.2 million tonnes primarily in UK and Netherlands.

''The takeover would be a defining moment for the firm and is entirely consistent with our strategy of growth through international expansion,'' Tata Steel Chairman Ratan Tata, who is expected to chair the new board of Corus, said.

The acquisition is proposed to be made by Tata Steel UK, a wholly-owned indirect subsidiary of Tata Steel, formed for the purpose.

Tatas will invest 3.5 billion dollars and 4.7 billion dollars will be raised through the SPV for funding the enterprise value at 10.2 billion dollars.

Speaking on the funding of the deal, Tata Steel Vice President (Finance) Kaushik Chatterjee said that substantial funds were available with the company and it was sitting on significant cash.

''We are confident about the deal going through, as no regulatory approvals are pending. There is certainity of funds in place with the topline addition to be done immediately and bottom line addition to be done in due course,'' Mr Chatterjee said.

The Anglo-Dutch identity of Corus and its management will be retained. ''We see potential for significant synergies in the functional areas of manufacturing, logistics, sharing best practices and marketing and distribution among others sectors,'' Mr Muthuraman added.

The company expects EBIDTA margins of 25 per cent and a turnover of 32 billion dollars by 2011-12 over a capacity of 40 million tonnes during the same period.

Tata has also agreed to a deal on Corus pensions, a potential stumbling block to a deal, to pay 126 million pounds into the firm's pension scheme.

Pointing out that the deal, reflecting fair value, was 'not just to gain tonnage and compete with Lakshmi Mittal,' Mr Tata allayed fears of job loss saying ''it would have been far more had the deal not happened.'' The deal has been so planned that Tatas other project's in India and abroad are not affected and the Corus can service its own debts.

An integration-committe will be set up to work on convergence.

Corus Chairman Jim Leng said the deal was the culmination of talks with firms in Brazil, Russia and India. He said, ''This combination with Tata, for Corus shareholders and employees alike, represents the right partner at the right time at the right price and on the right terms.'' Corus and Tata Steel are companies with long, proud histories.

Together we will be even better equipped to remain at the leading edge of the fast-changing steel industry, he said.

UNI CS/DKS RA HT1909