When Tata Steel Acquired Corus Tata Steel

The biggest steel producer in the Indian private sector acquired Corus, a Dutch Steel Company in a deal worth 12 billion USD in 2007. A financial decision of this magnitude has significant implicitness for both Tata Steel and Corus as well as their employees and shareholders. Details of acquisition are as follows:

This acquisition has been a largest private sector transaction by Indian company outside of India and named Tata Steel Europe in 2010.

Tata Steel raised a debt of over $8 billion to finance the transaction. The deal will be paid for by Tata Steel UK, a special purpose vehicle (SPV) set up for the purpose. Another company of the Tata group, Tata Sons Ltd., invested$ 1 billion dollars for preference shares along with Tata Steel which will invest an equal amount.

Tata Steel, the acquirer company, arranged about 36,500 crores of rupees to finance the take-over.

Tata Steel raised this amount through debt or equity or a combination of both. Some amount came from internal accruals also. This financing decision affected the capital structure of the acquirer