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Friday, Oct 06, 2006
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Steel Corporate - Mergers & Acquisitions
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Benefits Steel makers want to match China, which is a net exporter of steel, according to analysts. Tata Steel can expand its range of products by acquiring Corus. For the UK outfit, it will provide access to cheaper iron ore sources through Tatas.
Mumbai , Oct. 5 Tata Steel on Thursday said the company was reviewing various takeover options including that of British steel-maker, Corus Group Plc. "However, there can be no certainty that an approach will be made and, if made, that it will result in an offer," the company said in a notice to the BSE.
ECHO ON FTSE
The Tata statement found an echo on the FTSE, where Corus shares rose by 15.40 per cent (or 62.75 pence) to touch 470 pence by 12.30 GMT. Reports also indicated that trading volumes in Corus had reached four times their normal 90-day average daily volume, as the shares climbed a new peak in more than six years.
ON BSE
Back home, Tata Steel recorded a 2.68 per cent (or Rs 14) rise to close at Rs 537.35 on the Bombay Stock Exchange. Indeed, the steel industry worldwide is going through a major consolidation process. Steel makers are looking at cutting production costs through mergers or acquisitions, which has accelerated the consolidation process. More importantly, they want to match China, which is a net exporter of steel, according to analysts.
Possibility
"Although both the companies have not yet put out any official statement, a take over of Corus by Tata Steel seems possible. For one, Tata Steel can expand its range of products by acquiring Corus. For the UK outfit, it will provide access to cheaper iron ore sources through Tatas," an analyst said. Tata Steel has plans to ramp up production capacity from the present over 5 million tonnes to about 25 million tonnes by 2015. It is also looking to stretch into overseas markets by expanding its network and offering value-added products. Corus Group Plc, one of the world's largest metal producers with an annual turnover of £9 billion, has major operating facilities in the UK, the Netherlands, Germany, France, Norway and Belgium.
More Stories on : Steel | Mergers & Acquisitions | Tata Steel Ltd | Overseas Investments
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