02-10-2012, 05:15 PM
MERGERS AND ACQUISITIONS A CASE ANALYSIS ON ARCELOR-MITTAL and TATA CORUS DEAL
MERGERS AND ACQUISITIONS.pptx (Size: 815.07 KB / Downloads: 39)
INTRODUCTION
A merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated
BENEFITS OF M&A
Gain market share
Economies of scale
Enter new markets
Acquire technology
Utilization of surplus funds
Managerial Effectiveness
Strategic Objective
Vertical integration
Trends in global steel industry
Consumption of steel increased after 1950 and trend was continued till 1970
Consumption of steel started decline from 70s to 80s
After 80s, demand for steel increased continually
International Iron and Steel Institute (IISI) forecasted increment in demand for steel from 1.32 billion tones (in 2010)to 1.62 billion tones(in 2015)
This demand will increase due to countries like India and china
To capture this demand, biggest steel producer of India (TATA Steel ltd.) has been increased its production base by acquiring 4th largest steel producer of world(Corus steel)
Why TATA decided to buy Corus
To tap European market
Helped TATA to feature in top 10 Steel producer of world
Cost of acquisition is lower than setting Green field plant and distribution channel
TATA manufactures Low value long & fast steel products while Corus produced high value Stripped product
Technology Benefit, Economic of scale. Corus holds number of patents and R&D facilities