It has been a long night of suspense in India, what with auction for acquiring controlling stake in Anglo-Dutch steelmaker Corus Group Plc getting underway a little after ten Indian time (1630 hrs GMT). In the end, Tata Steel emerges winner having bid 608 pence a share to Brazil’s CSN’s 603 pence a share. [Image source]
Before the bidding started, Tata Steel and CSN stood at 500 and 515 pence a share respectively. The bid floor price was 500 pence a share.
Tata Steel will have to shell out $11.3 billion for winning the bid, and post-Corus, at a combined production of 23 million tonne annually it will become 5th largest steel conglomerate in the world behind, Mittal-Arcelor, Nippon Steel of Japan and Posco Group of South Korea.
Though this takeover is the largest ever so far by an Indian company, the stock markets are not amused. In a clear thumbsdown signal, Tata Steel skidded downward by about 10% after today’s trade on BSE and NSE.
Analysts say the costly Corus deal is not good for Tata Steel’s health in short to medium term. The long term story is yet to strike root, which means the share may slide even further, although the F&O figures suggest that the share as of now is in oversold position.
Related story: Tatas pip CSN to win Corus takeover battle