Tata Takes On Corus $10billion Deal

[joey]

remember severstals last minute asking to Arcelor placing a bid on which mittal puted a COMPLETE FULL STOP by simply raising the premium behind their reach.
tata cant do tht i agree as limited funds but will be enugg to outnumber brazil lets hope for best.
not to forget Indian lobby in UK .

 

[Bull]

i would say this is one of the biggest blunders indians have ever made thus far ( assuming they close the deal and take corus ) in their international forays.

thats your opinion...this deal has been hailed as the merger of two companies who can supplement each other,unlike the mittal arcelor deal.

Not long ago Corus was valued at around 180 million pounds ( same thing now being sold for £4.5 billion pounds )...and was running loss of 500 million pounds annual....before its fortunes were turned by factors outside its control.

Please dont speak ****,if u know nothing.there were very imp thngs that changed within the company.If you dont know please go and find out.

corus further improved its situation by shutting plants and cutting jobs ( by raising funds from sale of aluminum plant --now the indians wouldnot be getting aluminium plant ).

TATA Steel is a steel company it doesnt want the headache of getting a plant which they dont know what to do with and then getting into the head ache of dispensing it off.If corus sold it the money is with corus right,that will come to the TATAs.

What is TATA doing? TATA is loaning 2-3 billion pounds to buy Corus.....which simply means the indians would be paying good money ( in interest payments ) back to the westerners who loaned them the money to buy corus...and they donot even have to worry about the headache of corus slipping back into loss-making....as is expected.

Do you know what the debt equity ratio of TATAs is before and after the takeover?
Do you know how they plan to finance the deal?
Do you know what interest rates they pay to foreign banks compared to what they pay domestically to Indian banks?

Of the 4.5 billion price of corus.....2 billion is added purely due to market speculation in the last 6 months itself ( when the russian rumors were abound..these rumours added about 1.5 billion dollars as bid was expected..which never came....then the indian rumour started which made the share price jump further adding another 500 million pounds or so....before the indians actually came out with a price)......from this one doesnot have difficulty in concluding that corus is being sold...way over its worth. From the British and Holand shareholder's point of view this is truely win win situation...they should take the money and run!.

Have a look at the graph and compare the price of 455p which TATA is offering.Its absolutly makes sense.

 

[Bull]

Joey,

What are these rumors about Brazilian bid?
I thought Corus was a done deal!

Although Tata’s bid, at £4.55 a share, is at a 26 per cent premium to the average share price in the year leading up to the bid, the shares have since risen above that mark as traders have been betting that a rival bid is likely. If a higher offer is tabled for Corus, Tata is expected to withdraw.

A counter-bidder would have to seek support of the trustees of Corus’s two main pension schemes, who have agreed to back Tata’s bid.

 

[Bull]

Kochi: It’s a classic case of the hunter becoming the hunted. Amidst news that Brazil’s biggest steel-maker Companhia Siderurgica Nacional or CSN may rival Tata Steel’s bid to buy the UK’s Corus, it’s learnt that a Tata-Corus combine may make an offer to acquire the Latin American steel giant. If a straight acquisition does not work out, the special purpose vehicle created to buy Corus may try a share-swap arrangement with the NYSE-listed CSN with annual revenues of about $1.72 billion.
Believed to be initiated by lenders such as Standard Chartered Bank, who are advising Tata Steel on its friendly acquisition of Corus, a deal with CSN would add 5.8 million tonnes of steelmaking capacity to Tata-Corus’ 23 million tonnes per annum. It would, more importantly, give the group access to some of the cheapest and largest iron ore mines in Brazil that could offset Corus’ high cost of raw materials. Tata Steel’s stock of a billion tonnes of ore is insufficient to feed its domestic and international operations (Corus, Natsteel of Singapore and Thai Millennium) in the long run.
Tata group officials, when contacted, declined to comment. However, sources familiar with the development say the plan is being explored. Corus’ bankers, who hold about 35% of the shares in the UK company, are financing the Tatas’ acquisition. They are also willing to back them in a bid for CSN. The Tatas, however, are said to have put a rider.
The group does not want to make a hostile bid and has indicated the acquisition should be a happy marriage like the Corus deal, in cash or through a share swap.
The bankers have several reasons to help Tata Steel buy CSN. The main reason is that CSN owns the world’s largest iron ore mines. CSN and a few other companies together have a 42% stake in Companhia Vale Do Rio Doce (CVRD), the largest global producer and supplier of iron ore and pellets. It directly owns 16.3% in CVRD. It also owns a major gold mine in Brazil.
The availability of cheap ore is the main reason why steel giants such as theSouth Korean Posco and UK’s Mittal Steel are making a beeline for the mineral rich states of Orissa and Jharkhand. They plan to ship lowcost primary steel to be processed further at their overseas high-cost units located close to their consumers in the construction and automobile industries.

STRATEGIC MOVE


NYSE-listed CSN of Brazil has annual revenues of $1.72 billion It will add 5.3 million tonnes to Tata-Corus’ 23 mt capacity CSN owns the world’s largest iron ore mines. These will provide Tatas a cheap supply of raw material to offset the high costs incurred by Corus Combine can also use CSN’s Heartland steel mill in US It will also give Tata-Corus direct entry into Portugal

Corus, CSN have longstanding ties


Kochi: The Tata Steel-Corus combine’s bid to acquire Brazil steel giant Companhia Siderurgica Nacional or CSN may become easier as Corus and CSN have a longstanding relationship, with the two having unsuccessfully explored the possibility of a merger in 2002.
Four years later, Corus sold its interest in Lusosiderin, a galvanised steel unit, a JV with CSN, to the Brazilian company. Although CSN and Tata Steel have similar production capacities, the Brazilian firm has just 8,000 employees compared to the Indian company’s workforce of 38,000. The Tata-Corus combine can also utilise CSN’s Heartland steel mill (acquired in 2001) in the US to supply high-grade steel to customers there.Buying CSN would also give it direct entry into Portugal with value-added steel products like galvanised steel used in construction and housing.

 

[Srirangan]

What is TATA doing? TATA is loaning 2-3 billion pounds to buy Corus.....which simply means the indians would be paying good money ( in interest payments ) back to the westerners who loaned them the money to buy corus...and they donot even have to worry about the headache of corus slipping back into loss-making....as is expected.

Why the hell would Indian tax payers fund TATA's acquisitions? You obviously know not much.

 

[Skeptic786]

Problem with indians is and has always been is to disbelieve something coming from a pakistani person/ source....not because it is suspect but becuase it is coming from pakistani origin. Instead of answering each and everyone of you individually....i am posting my reply for all of you can read it and if you can refute anything i say with proof your welcome to do so.

As far your comments as me not knowing about corus or what i said about its valuation being around 180 million not very long ago....only proves the point i started this post with. DO you have any proof what i said was wrong? no you didnot....do you even know the old name of Corus??? ( i do..since i was a sharesholder of it in its old name ). In the last 3 years ( first quarter 2003 ) at one point corus shares fell to 4p...yes 4p ( that was even below 180 million ) and it looked like corus was going to be bankrupted out of existance....its saviour came not from steal business but alumium plant which was sold to make ends meet and keep it float ( in addition to job cuts and steal plant closure at some sites )......then the price of steal increased ( due to china sucking in huge amounts of steal...china will be exporting steal next year....hence corus bad days are only round the corner ). Corus deal is good for the shareholders.....if indians are ever going to see a penny of profit then they will have to swallow the steal it produces themselves....since almost everyone else can and will be getting ( and will be getting from china ) cheaper steal.

As far as any other bidder coming....this is mere attempt to squeeze more money out of indians or to keep them firm to take corus...thinking they have achieved something....the fact is if corus had been worth its salt in the truest sense the russians with far more deeper pockets than TATA would have taken it a year ago, when it was on offer for half the amount indians are paying now ( yes half the amount ). They didnot...having analysed the situation. Instead of spewing rubbish against me...i invite you indians to go check the graph of corus shares for the last five years and see the facts for youself.

 

[Srirangan]

Gee what a nice cry rant. Listen, TATA-Corus might be successful or it may not. I'm sure the executives who have made the decision know a lot more about the Steel Sector than you do.

And then you come along with an absurd claim that the Indian tax payer will suffer if TATA-Corus goes in loss, making such an obviously stupid claim shows your lack of knowledge. TATA is not an Indian Company ie. it is not owned by the Indian Government (State or Central). So even if it fails, the investors and the share holders of TATA will suffer, not the Indian tax payer. The Indian taxpayer has nothing to do with TATA.

 

[Skeptic786]

Gee what a nice cry rant. Listen, TATA-Corus might be successful or it may not. I'm sure the executives who have made the decision know a lot more about the Steel Sector than you do.

And then you come along with an absurd claim that the Indian tax payer will suffer if TATA-Corus goes in loss, making such an obviously stupid claim shows your lack of knowledge. TATA is not an Indian Company ie. it is not owned by the Indian Government (State or Central). So even if it fails, the investors and the share holders of TATA will suffer, not the Indian tax payer. The Indian taxpayer has nothing to do with TATA.

The claim doesnot show my lack of knowledge....rather exposes your own hidden prejudice...Tell me where did i say indian tax payer or indian government will suffer????? see you suffer from that disease i highlighted in my above post. I didnot bring in the indian tax payer or indian government in my posts in this thread.

As far as your statement that executives know better is not always true either.....wall street experts were tipping Enron as a buy in all the share advices they were releasing...and Enron had all the top executives and lawyers....yet it went belly up...leaving ten of thousands of people penniless. Not to mention other great blunders of history.

 

[Srirangan]

To make a monkey out of a man, just quote him:

What is TATA doing? TATA is loaning 2-3 billion pounds to buy Corus.....which simply means the indians would be paying good money ( in interest payments ) back to the westerners who loaned them the money to buy corus...

Indians won't be loaning the money, TATA will be loaning the money. Read the Indian Company Act (1948), you'll know what I mean.

 

[Srirangan]

Oh and your assumption that TATA would be loaning money from the west is unsubstantiated. The amount could be very well raised n the domestic market. A lot of people like to buy shares you know ..

 

[Skeptic786]

To make a monkey out of a man, just quote him:

Indians won't be loaning the money, TATA will be loaning the money. Read the Indian Company Act (1948), you'll know what I mean.

what is wrong with you? where do i say anything about indian tax payer or indian government in my quote? read it carefully


What is TATA doing? TATA is loaning 2-3 billion pounds to buy Corus.....which simply means the indians would be paying good money ( in interest payments ) back to the westerners who loaned them the money to buy corus...

Do i not say TATA would be loaning the money?

The problem is you cannot argue with what i say....so your out to create facts of your own.

 

[Skeptic786]

Oh and your assumption that TATA would be loaning money from the west is unsubstantiated. The amount could be very well raised n the domestic market. A lot of people like to buy shares you know ..

See you not even aware of basics of TATA approach....TATA is raising the money by floating bonds....which is interest paying instrument.

 

[Srirangan]

You also said Indians will be "paying back the loan" which is factually incorrect. TATA would be paying back the hypothetical loan you assumed.

I actually raised more points than what you wanted to discuss. You were hasty in deriving your conclusion that "Indians will lose money to the West" while there are great chances that TATA could raise the capital from the Indian market itself.

Regardless, you accuse me of bias while your so called conclusions are hasty, not well thought off and are even redundant but your adamant nature in trying to stick with them shows your true intentions of seeking to malign "indians" no matter what the facts are.

 

[Srirangan]

See you not even aware of basics of TATA approach....TATA is raising the money by floating bonds....which is interest paying instrument.

And bonds can't be raised in the Indian stocks and securities exchange markets? And how do "indians" pay up the interest to the West?

 

[Skeptic786]

You also said Indians will be "paying back the loan" which is factually incorrect. TATA would be paying back the hypothetical loan you assumed.

I actually raised more points than what you wanted to discuss. You were hasty in deriving your conclusion that "Indians will lose money to the West" while there are great chances that TATA could raise the capital from the Indian market itself.

Regardless, you accuse me of bias while your so called conclusions are hasty, not well thought off and are even redundant but your adamant nature in trying to stick with them shows your true intentions of seeking to malign "indians" no matter what the facts are.

In my quote i said accurately that TATA would be loaning the money which is enuff for the readers to conclude that TATA would be liable for any payments...if my subsequent use of word indian in place of TATA has confused you into thinking that i meant indian taxpayers or indian government then let me clarify it for you once and for all. If i wanted to say indian tax payers or indian government would be liable i would have said so...i always meant TATA and my posts have been directed at its offer and any liability to its shareholders. But then again its the indian origin of TATA that has interested you and others indians to talk on this topic...so my use of the word indian/indians for TATA and its shareholders is in no way unappropriate or confusing.

I am disregarding the comments against me....lets simply talks on facts and opinions on the topic. We can agree to disagree and the time will be the ultimum arbitor of who is right or wrong. As far as my opinion of corus or its valuation is concerned.....as i said look up corus share graph for the last 5 years and you will come to know facts for yourself. There is a reason russians didnot buy corus for half what indians are paying.