Deal of TATA Corus' winning History

The Acquisition is proposed to be made by Tata Steel U.K., a wholly-owned indirect subsidiary of Tata Steel, recently incorporated in the United Kingdom for the purpose of completing the Acquisition. The said Acquisition is proposed to be effected by means of a scheme of arrangement under Section 425 of the (English) Companies Act 1985; subject to High Court of Justice in England and Wales and Corus' shareholders approvals being obtained.

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 this year.

Sources familiar with the matter said on Oct. 17 Corus's board had given tacit approval to the bid and had given Tata access to its books to firm up the offer. Tata said in a statement it had agreed a deal on Corus pensions, a potential stumbling block to a deal, and would pay 126 million pounds into the firm's pension scheme. Tata said the deal valued Corus at a multiple of about 5.4 times underlying earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations for 2005.

Shares in Corus, which have risen more than 50 per cent this year amid persistent bid talk, fell 1.5 per cent to 471-1/4 p by 0722 GMT. Shares in Tata Steel rose 2.6 per cent to Rs 514.80. "They wanted the company and they have got it. But we have to see how the funding happens and how the integration progresses. One distinction is that EBITDA margins for Tata's are about 40 percent and for Corus is about 7 percent," said Sreesankar, head of research at IL&FS Investsmart, in Mumbai.

Corus, created through the merger of Dutch firm Hoogovens and British Steel in 1999, agreed in March to sell most of its aluminium assets in a deal which analysts said paved the way for the company to take part in steel consolidation.