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Indians steel the global show
Published on Wed, Oct 18, 2006 at 18:24, Updated on Wed, Oct 18, 2006 at 22:10 in Business section
Tags: Tata-Corus Deal, Takeover Bid , London
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London/New Delhi: Three of the top 10 global steel companies are set to fall into the hands of Indians with the Tata group making an indicative offer of £4.1 billion ($7.6 billion) to take over the Anglo-Dutch firm Corus.
This is also the latest salvo by the 138-year-old Tata group - among the top business houses in India with 96 companies in its empire - to spread its wings across the globe in all its seven areas of operations.
A merger of Corus with Tata Steel will create the sixth largest steel producer in the world and would amount to the biggest takeover of a foreign firm by an Indian company, analysts said, adding the deal made sense for both companies.
"I can't see anyone who would have as much to offer Corus as Tata," said John Quigley, editor of industry publication Steelweek, adding that the deal would give Tatas access to western markets and Corus a source of low-cost steel.
"There are not many opportunities for producers in emerging low-cost markets to gain access to the markets of Europe other than by acquiring a company like Corus," Quigley added.
The Anglo-Dutch company is currently ranked the ninth largest steel producer in the world while Tata is ranked 56th and the merger will more than and quadruple their sales to $23 billion.
Corus has 24,000 employees in Britain and 16,000 in Holland, and the only worry is over the retention of workforce. Community, the association of British steel workers, wanted guarantees from Tatas on employment, pay and pensions.
"I want Tata to pledge to maintain the existing Corus workforce in Yorkshire and elsewhere and to work with the steel union - Community," Denis MacShane, MP from Rotherham, wrote to Prime Minister Tony Blair.
He also wanted the Indian steel maker to uphold wages and protect pension rights of existing and retired Corus employees.
Corus said talks were on with Tata Steel, even as industry experts felt the bid price may have to be revised upward as some European and Russian steel makers may join the race for Corus.
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