In August 2007, an electrifying atmosphere pervaded Jamshedpur. Tata Steel had just acquired Corus for $12 billion in what was India's biggest cross-border acquisition. That it coincided with the company's centenary year made the deal extra special. It meant the celebrations just got bigger.
In the same month, the first commercial flight connecting Jamshedpur was launched by Air Deccan; the then Corus CEO, Philippe Varin, released historian Russi Lala's book for the centenary, The Romance of Tata Steel; and a 20-minute film on Tata Steel put together by Zafar Hai was shown at Jamshedpur Works. Tata Steel was in the mood to celebrate and Corus made it more meaningful.
B Muthuraman, the then managing director, was the man of the moment. Seemingly satisfied with the way things had turned out, he gave a stirring speech to a gathering of employees and guests assembled at Jamshedpur. Prior to the acquisition, he said, he wasn't too excited about the centenary celebrations. "There was something missing...one has to earn a celebration," he said.
Tata Steel had truly earned it. Besides Tata Steel, Corus had another suitor, Brazilian steelmaker CSN. A bidding war ensued which Tata Steel won but ended up paying a 34 per cent premium at 608 pence a share to its original offer. Even then, the deal had looked good.
"Tata Steel was desperately looking for a global acquisition. It was part of the company's long-term plan of achieving a 50-million- tonne capacity by 2015," an analyst points out.
The demand for steel was booming then. According to Tata Steel's presentation to analysts after the acquisition, global steel demand was expected to grow 5.9 per cent to 1,179 million tonnes in 2007; China's steel demand was set to grow 13 per cent and the demand in India was expected to grow 10.2 per cent in the same year.
Source: business-standard.com