The Hindu Business Line : Corus buy: Tata to finalise financing structure soon

Steely drive
Equity-debt combination at 40:60 ratio
Reconstituted Corus board to have representatives of Tata Steel
Synergies worked out between the two companies in areas such as manufacturing, best practices, marketing and R&D

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Jamshedpur March 3 The financial structure with regard to the Corus acquisition will be finalised within the next few weeks. In all likelihood, it will be a combination of equity and debt in a 40:60 ratio, according to Mr Ratan Tata, Chairman of the Tata Group.

Addressing a news conference on the occasion of Tata Steel Founder's Day here on Saturday, Mr Tata said that while Tata Steel had paid a higher-than-expected price for Corus, it was in the "realm of what we can justify".

Of the Tata-Corus union, he said, "We believe history will say we did the right thing."

A reconstituted Corus board would comprise representatives of Tata Steel even as an invitation would be extended to some "prestigious" members of Corus to join the Tata Steel board "in the true spirit of partnership''.

Deal justified

Mr Tata justified the Corus deal stating that it was "unique" in view of the company's scale of operations, its presence in Europe and its brand equity. "It was a company which, we believed, shared our values and management systems."

In this context, he mentioned that while the Tata Group was open to the idea of synergistic mergers and acquisitions on a global scale, it would not go in for acquisitions or partnerships "if the values of that company or management grossly differ from our own".

EGM on March 7

The Tatas would not engage in any hostile takeover bid, he stressed, adding that the Corus board had unanimously accepted Tata Steel's takeover proposal and had even recommended it for shareholders' approval. An extraordinary general meeting for the company is scheduled to be held in London on March 7, in this regard. By April, the Anglo-Dutch steel major is likely to formally become a Tata Group company. An integrated management committee would oversee the company's operations.

Immediate focus

The immediate focus would be on "extracting synergies" from Corus. "Our intention is to make Corus a competitive steel company. We hope to inculcate the creativity and cost-consciousness in Corus as we have generated in Tata Steel." This would be of "significant value" to the operations of Tata Steel, he said.

Mr Tata highlighted the need for raw materials security and said the Tata Group was looking at "how we can align ourselves, buy into and partner with sources of iron ore, coal, etc."

The group is scanning various possibilities in this regard, including the acquisition of a coal mine in Australia.

Speaking on the occasion, Mr B. Muthuraman, Managing Director of Tata Steel, said a team had worked out synergies between Tata Steel and Corus in areas such as manufacturing, best practices, marketing and R&D. Tata Steel could also draw from Corus' core competencies in areas such as construction steel, tinplate, steel for automotives and packaging, he said.

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