Tata Steel: Financing the Corus Acquisition

S. R. Vishwanath ()
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S. R. Vishwanath: Institute of Management Technology, 603, Khullar Apartments, Byramji Town, Nagpur 440 013, Maharashtra State, India

Asian Case Research Journal (ACRJ), 2010, vol. 14, issue 02, 295-312

Abstract: Tata Steel announced the acquisition of Corus group in October 2006. After a prolonged bidding war with the Brazilian steelmaker CSN, Tata Steel purchased Corus group for about $13b. The case considers the financing package put together by Tata Steel to fund the Corus acquisition. Students are asked to value the different securities offered and evaluate the financing package.This case can be used in a Corporate Finance course in a module on Financing or in a Mergers and Acquisitions course or in a Financial Instruments and Markets course. The case has the following objectives:1. To introduce students to the characteristics of preferred stocks and convertible instruments.2. To consider the factors relevant to the selection of different types of securities in financing.3. To introduce concepts like dilution, leverage, debt capacity.4. To introduce credit ratings.5. To introduce valuation of contingent claims.6. To build skills in designing and implementing an integrated acquisition and financing strategy.Instructors teaching this case could consider teachingTata Steel (A): The Bid for Coruscase first although these cases can be taught independently.

Date: 2010
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DOI: 10.1142/S0218927510001428

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