The inside story of the biggest-ever overseas acquisition by an Indian firm, report Arun Kumar and Sabarinath M.Updated: Feb 01, 2007, 03:41 IST
Tata Steel won the battle for the takeover of Anglo-Dutch steelmaker Corus on Wednesday, agreeing to pay a final price of $12.1 billion (Rs 53,469 crore) after eight hours of tense bidding against Brazilian steel major Companhia Siderurgica Nacional (CSN). The acquisition, the biggest-ever by an Indian company overseas, makes Tata-Corus the fifth largest steel manufacturer in the world.
The drama began on Tuesday afternoon with Arun Gandhi, the Tata Group’s mergers and acquisitions head, Koushik Chatterjee, Tata Steel’s vice-president, finance, and Sandeep Biswas, Tata Steel’s marketing head, arriving at the London offices of the group’s UK lawyers, Herbert Smith. They were accompanied by their advisers, top officials of ABN Amro Bank, Deutsche Bank and investment bankers N.M. Rothschild. The broad strategy had been hammered out earlier at a closed-door meeting in a Buckingham Gate Hotel suite. Ratan Tata, assisted by N.A. Soonawala, Tata Sons vice-chairman, and B. Muthuraman, Tata Steel’s managing director, directed the team’s moves from Mumbai. All three spent a sleepless night at the Tata-owned Taj Mahal Hotel.
The CSN team, led by Chief Financial Officer Octavio Lazcano and assisted by investment bankers Goldman Sachs and Lazard, operated from Lazard’s London headquarters. Corus chairman Jim Leng and chief executive Philippe Varin were at the offices of their law firm, Slaughter and May.
"I was determined to win," Arun Gandhi told Hindustan Times in a telephonic interview after the drama ended. "Right from the beginning, we kept raising the offer price."
Starting at 4.30 pm London time, the battle went through eight rounds of bidding, with both sides submitting bids by e-mail before the UK's Takeover Panel which was overseeing the process. In the ninth and final round Ratan Tata himself advised Gandhi to declare that Tata was prepared to bid five pence higher than whatever price per share CSN put up. CSN made its final offer at 603 pence a share, at which point the deal was sealed for Tata at 608 pence a share.
This was followed by the Takeover Panel's formal announcement that the Tata group had won the bidding. A beaming Ratan Tata immediately congratulated his entire team.
"I must tell you we were prepared to go even beyond 608 pence per share. We had set a limit for ourselves before we set out for the auction which was higher," Gandhi revealed.
"We sensed CSN's combative mood when it started talking about its synergies with Corus. We were sure CSN would go past the 600 pence per share mark." He added: "But we decided to cross 600 pence only last week." "With this step Tata Steel has grown from a regional company into a global company," added Koushik Chatterjee. " It gives us a presence in Europe's steel sector, a brand, and a distribution network. It will be a platform for further consolidation and growth. It brings in capabilities from outside, and builds our management bandwidth."