The Telegraph
Since 1st March, 1999
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Tatas shop for Corus shares

Feb. 1: After outbidding CSN to win Corus, the Tatas wasted no time to get down to brass tacks as it mopped up 21.1 per cent shares of the Anglo-Dutch steelmaker from the market yesterday.

In a communication to the Bombay Stock Exchange (BSE) today, Tata Steel said its wholly owned subsidiary, Tata Steel (UK), bought 199,955,952 shares of Corus at 608 pence a share, the final offer that trumped CSN’s bid of 603 pence. Tata Steel paid £1.21 billion, or $2.38 billion, for the shares.

Sources close to Tata Steel said the company would continue to buy from the market. “Bankers and brokers are funding the acquisition,” they added.

Yesterday, after winning the nine-round auction for Corus, the company said it intended to acquire shares from the market at a price of up to 608 pence.

After the swoop on the market yesterday, Tata Steel owns one-fifth of Corus, making it the largest shareholder by a considerable margin.

The company could have bought the shares after the Corus shareholders approved the bid in the court-convened meeting which is a mere formality now. Instead, it decided to buy the shares to pre-empt any further rival offer.

CSN, it can be recalled, already had 3.8 per cent shares of Corus when it made the formal ‘approach’ for the Anglo-Dutch steelmaker. The Corus scrip was trading at 601.5 pence at midday today.

However, the Tata stock continued its southward journey in an otherwise strong BSE as shareholders continued to fret over the short-term implications of the Tatas’ $11.3-billion deal.

After the over 10 per cent plunge yesterday, the stock again came off by Rs 6.20 to close at Rs 457.75.

Product mix

The Tatas are banking on infotech and communications to restore the parity in its business portfolio, though the enterprise mix is now skewed towards steel after the acquisition of Corus.

Prior to Corus, half the group’s turnover was in steel and automobiles.

However, after the acquisition of Corus, which creates a steel giant with a combined revenue of over $24 billion, steel is expected to contribute well over 50 per cent to the group’s business.

Ratan Tata yesterday said though steel will have a much greater weightage after the Corus acquisition, the contribution of other industries, particularly automobiles and information technology, is growing. This is expected to ensure that business mix in the group stabilises again.

“I see information technology and communications growing quite substantially,” he had added.

Sources close to the group add that with Tata Motors, Tata Consultancy Services (TCS) and the group’s communications business also on an aggressive path, close to 65 per cent of the group’s business will be accounted by steel, auto and IT sectors in the years to come.

In automobiles alone, the Tatas have chartered out an ambitious blueprint, a case in point being the upcoming small car project.

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