International Journal of Financial Management

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Are Mergers and Acquisitions Beneficial? the Case of Tata's Corus Buy


Affiliations
1 Assistant Professor and Director I/c, B P College of Business Admn., Gandhinagar
2 Faculty, Neesa Institute of Management Studies, Ahmedabad
3 Principal, C. Z. Patel College of Management and Commerce, Anand
4 Assistant Professor, B P College of Business Admn., Gandhinagar
     

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Mergers and acquisitions in the recent times have emerged as the top strategic moves of companies world over in the face of globalization. Not only survival and growth, such strategies have now been the preferred options even for establishing and/or expanding international presence of the forward looking corporate giants. India witnessed the largest ever overseas acquisition in April 2007 when Tata Steels Limited acquired the Anglo Dutch steel producer Corus Group Plc (Corus) for US$ 12.11 billion. After this acquisition Tata Steel emerged as the fi fth largest steel producer in the world. However, there have been serious doubts and apprehensions regarding whether the acquisition has been benefi cial for TATA or not. Since TATA has already lived the acquisition for around three years by now, one is tempted to discover the hidden truth. In the present paper, an attempt has been made to see how TATA has been affected by its acquiring of Corus group. For this purpose the authors have analyzed the pre and post acquisition performance of TATA with the help of the various fi nancial ratios of the company. The paper concludes that TATA is apparently in benefi t of its buying of Corus and still to benefi t in the long run from capital and technology of Corus.

Keywords

Merger, Acquisition, Financial Ratio
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  • Rehesh Kumar, B. and Pranina Rajib (2007), “An Analytical Study on Multiple Mergers in India,” IIMB Management Review, March, Pp. 1-11.

  • Mantrawadi, P. and A. Vidyadhar Reddy (2007), “Relative Size in Mergers and Operating Performance: Indian Experience,” Economic and Political Weekly, Septermber 29, Pp. 3936-42.

  • Mishra, A. K., and Rashmi Goel (2005), “Returns to Shareholders from Mergers: The Case of RIL and RPL Merger,” IIMB Management Review, September, Pp.69-79.

  • Shrimali, Vijay and Karunesh Saxena (2004), “Mergers and Acquisitions: Sun is Shining Brightly”, Indian Journal of Accounting, Vol.xxxv(1), December.

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  • THE HINDU, Thursday, Feb. 01,2007, India Inc hails Tata’s Corus acquisition 7. Annual Report of Tata Steel, 2006-07, 2007-08 and 2008-09.


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  • Are Mergers and Acquisitions Beneficial? the Case of Tata's Corus Buy

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Authors

Ramakanta Prusty
Assistant Professor and Director I/c, B P College of Business Admn., Gandhinagar
Priyanka Gohil
Faculty, Neesa Institute of Management Studies, Ahmedabad
Atul Bansal
Principal, C. Z. Patel College of Management and Commerce, Anand
Jayesh J Tanna
Assistant Professor, B P College of Business Admn., Gandhinagar

Abstract


Mergers and acquisitions in the recent times have emerged as the top strategic moves of companies world over in the face of globalization. Not only survival and growth, such strategies have now been the preferred options even for establishing and/or expanding international presence of the forward looking corporate giants. India witnessed the largest ever overseas acquisition in April 2007 when Tata Steels Limited acquired the Anglo Dutch steel producer Corus Group Plc (Corus) for US$ 12.11 billion. After this acquisition Tata Steel emerged as the fi fth largest steel producer in the world. However, there have been serious doubts and apprehensions regarding whether the acquisition has been benefi cial for TATA or not. Since TATA has already lived the acquisition for around three years by now, one is tempted to discover the hidden truth. In the present paper, an attempt has been made to see how TATA has been affected by its acquiring of Corus group. For this purpose the authors have analyzed the pre and post acquisition performance of TATA with the help of the various fi nancial ratios of the company. The paper concludes that TATA is apparently in benefi t of its buying of Corus and still to benefi t in the long run from capital and technology of Corus.

Keywords


Merger, Acquisition, Financial Ratio

References