MERGING & ACQUISITIONS

On 20 October 2006 the board of directors of Anglo-Dutch steelmaker Corus accepted a 7.6 billion takeover bid from Tata Steel. The deal is the largest Indian takeover a foreing company and made Tata Steel the world's fifth-largest steel group.





The process of mergers and acquisitions has gained substantial importantce in today's corporate world. this process is extensively used for restructuring the business organizations.





This concept was initiated in India by the government bodies. Some well known financial organizations also took the necessary initiatives to restructure the corporate sector of India by adopting the mergers and acquisitions policies.





As an example I will discuss one of the major deals.

This acquisition was the biggest overseas acquistion by an Indian company. Tata Steel emerged as the fifth largest steel producer in the world after the acquisition. the deal gave Tata Steel acces to Corus' strong distribution network in Europe.

Tata Steel was a low cost steel producer in fast developing regionof the world and Corus was a high value product manufacturer in the region of the world demanding value products.

Some of the collaborations that could arise from the deal were:

* Tata Steel was one of the lowest cost steel producers in the world and had self sufficiency in raw material. In the other hand Corus was fighting to keep its productions costs under control and was on the look out for sources of iron ore.

* There was a strong culture fit between the two organizations both of which highly focused on continuous improvemnt and ethics.

After the acquisition, the top managment team of Corus was retained as Tata Steel believed that a high degree of cultural compatibility existed between the two companies. This was expected to facilitate an effective integration of business over a period of time.