Ratan Tata discusses the takeover of Corus with Arun Kumar
When you made your first bid, did you have an inkling of the huge hurdle you would face?
When we made our first bid many thought it was an audacious move. An Indian company was making a bid for a European steel company much larger in tonnage size than itself. It was something that had never happened before.
We announced our bid last October, which had the support of the Corus management and the unions. Then we went into a long period of competitive bidding once CSN entered the fray. Many of us in the company wondered whether we would succeed.
The acquisition of Corus was an important strategic decision. But it was not a do or die effort. It was not a decision taken just to make Tata Steel a much larger company but an important strategic move. Corus is a unique opportunity for Tata Steel in terms of scale, its location and its culture.
I am glad we were able to win the auction. I think it is a moment of great fulfillment for all of us in India because Tata Steel as an Indian steel company now has global scale. I think it’s the beginning of Tata Steel’s global strategy.
While the transaction was on, and you were facing problems, did you ever consider any alternative assets in Europe? Or you were confident you would be successful in the end?
We have been talking to Corus for over a year now and believe that there exists a cultural fit between Tata Steel and Corus. Both companies have similar work practices. This is of fundamental importance to the post acquisition integration process.
When we undertake to acquire a company, we spend a lot of time convincing ourselves that the cultures of the two companies are similar because nothing can be more destructive than to have conflicting cultures.
In most of our acquisitions you will find that the management of the company we have acquired or bought into remains with the company and over time integrates itself with the Tata Group.
Tata Steel increased the bid amount by over 33 per cent from 455 pence to 608 pence a share. Has the transaction cost of over $12 billion made you change your business plan in any way?
It would have taken us several years to build a 19 million tonne enterprise from scratch, more so in Europe. We feel confident that the affinities between the two companies are such that the synergies will also be quite substantial. It will also be part of a more elaborate strategy that Tata Steel has, and which is yet to unfold. The British built the Indian railways to take iron ore out of the country to be used for the benefit of British steel companies.
Tata Steel in 2007 acquired one such company. Are you overwhelmed by the ironies of history?
I believe this will be the first step in ensuring that Indian industry can in fact go beyond the shores of India into the international marketplace and acquit itself well as a global player. I think Tata Steel will have a major role in creating an Indian presence in Europe. The top management of Corus will remain with the company and therefore will be part of our integrated operations, and this in itself is an expression of faith and confidence the existing management has in Tata Steel. So I look forward to a very worthwhile union between our two companies.