Tatas eyeing a mega global takeover?

KOCHI/MUMBAI: India Inc has been on anaggressive acquisition spree overseas, but here’s one that will be themother of all takeovers if it goes through. Tata Steel is said to beeyeing Anglo-Dutch steel producer Corus Group. Even as Tata Steel has officiallydenied any takeover plans, there is mounting speculation that the Tatas are intalks to acquire a majority holding in the company for anything between $8-9billion (Rs 36,000 crore-41,000 crore). Goldman Sachs and UBSWarburg are reportedly working at raising the funds for Tata Steel. Othersinterested in buying out Corus are Russia’s Severstal and Ervaz.Severstal was locked in an intense battle with L N Mittal a fewmonths ago when it bid for control of European steel giant Arcelor.That round went to Mittal. If this deal goes through in favour ofthe Tatas, it will mean several things. Corus is currently one ofthe largest steel producers in the world with 18 million tonnes of productioncapacity spread across the UK, the Netherlands, Germany, France, Norway andBelgium. With Tata Steel’s own capacity at seven milliontonnes, the combined entity could potentially be the fifth largest steelproducer in the world after Nippon Steel and Posco. What’s more, inEurope, Corus is a household name. More importantly, the company isa technology frontrunner and sells its know-how to steel companies across theworld. A stake in Corus, therefore, will not only represent the most expensiveacquisition in Indian business history, it will also dramatically upscale TataSteel’s position in the global steel pecking order. Coruscurrently generates 10 billion pounds (about Rs 87,000 crore) in turnover,making it much larger than Tata Steel with a turnover of Rs 15,139 crore.Sources close to the company say that Tata Steel also has an eye onGerman steel maker ThyssenKrupp. Like Corus, the German company is a householdname in Europe and can produce 17 million tonnes of steel annually.It may be recalled that a few years ago, when GautamSinghania’s Raymond Ltd put up its steel business on the block, Tata Steelhad bid for it. But ThyssenKrupp got ahead of Tata Steel andacquired the venture instead. Analysts believe Tata Steel stands to gainenormously if it manages to acquire control of Corus. Currently, itdoes not have a toehold in Europe and the US, 54% of which is controlled byArcelor Mittal. With Corus, Tata Steel stands a fighting chance in carving out ashare of the lucrative auto components market.