New Delhi / London: Tata Steel has spent $2.4 billion to buy a 21.1% stake in Anglo-Dutch steelmaker Corus, a day after it won a bid to acquire the company at a share price of 608 pence.
Tata Steel needs the backing of at least 50% of the company’s shareholders who control 75% of the Corus stock for its bid to go through, according to British law. The shares were acquired by the company’s wholly-owned subsidiary, Tata Steel UK Ltd, at a price of 608 pence a share according to a filing made by the company to the Bombay Stock Exchange.
Tata Steel has also asked shareholders keen to sell their holding in Corus to contact its corporate brokers, ABN Amro Hoare Govett and Deutsche Bank. Ratan Tata, chairman, Tata group has said that he expects the deal to be closed by March but analysts watching the deal said if the company continues to consolidate its stake at the same pace, the deal could close sooner.
The company has also moved quickly to finalize its plans regarding the management team that will run Corus. Ratan Tata will be chairman of Corus, and Jim Leng, the company’s current chairman, will become its vice chairman and be inducted onto the board of Tata Steel. Three other members of the Corus board, including chief executive Jacques Schraven will also join Tata Steel’s board. Tata Steel chief executive B Muthuraman, and Tata Sons directors Arun Gandhi and Ishaat Hussain will join the board of Corus.
Tata Steel’s integration team will be headed by Tata and include Muthuraman, Varin, and other senior executives of the two companies
Meanwhile, even as unconfirmed reports said that Tata Steel could opt for a global depository receipts issue to part fund its bid, its senior managers took time out to reassure shareholders and employees that the deal wouldn’t affect expansion .
“If all our announced projects come on to the floor, we would become the third largest steel maker in the world,” an executive at the company said on the condition of anonymity. According to this executive, the company’s plans for expanding its Jamshedpur plant and setting up new ones at Kalinganagar in Orissa and Bastar in Chattisgarh, are on schedule. Other projects announced by Tata Steel include new plants at Tentoposi in Jhankand, Iran, and Bangladesh.
Meanwhile, two British trade unions expressed concern at Corus’ acquisition by Tata Steel with one seeking a meeting with Ratan Tata. Corus has cut 8,000 jobs in the past eight years and Tata Steel’s gameplan of shipping semi-finished steel to Corus manufacturing facilities in the United Kingdom and the Netherlands could mean the loss of more jobs.
(PTI contributed to this report)