MR.

RATAN TATA, CHAIRMAN OF TATA STEEL, SAID:

This proposed acquisition represents a defining moment for TATA STEEL and is entirely consistent with our strategy of growth through international expansion. CORUS and TATA STEEL are companies with long proud histories. We have compatible cultures of commitment to stakeholders and complementary strengths in technology, efficiency, product mix and geographical spread. Together we will be even better equipped to remain at the leading edge of the fast changing steel industry.

MR.JIM LENG, CHAIRMAN OF CORUS, SAID:

This offer from Tata steel reflects the substantial value created for Corus shareholders since the placing and offer and launch of our Restoring success programme in 2003. In the middle of last year, my board agreed a strategic way forward for Corus to seek access to low cost production and high growth markets. Consistent with this, the company held talks with a number of parties from BRAZIL, RUSSIA and INDIA. This transaction represents the culmination of these talks. The combination with TATA, for CORUS shareholders and employees alike, represents the right partner at the right time at the right price and on the right terms. This creates a well balanced company, strategically well placed to complete in an increasingly competitive global environment.

Introduction
In every organisations life and in every economys life comes a time when growth development and expansion seems to reach a plateau. Across what is today called the developed countries, we are witnessing such a Cycle, where iconic brands, companies and institutions are being acquired and merged. And across the world into Asia, transition economies like India, China are pumping in billions of dollars to acquire a stake or control of some of the crown jewels of American/European Business & Industry. Until up to a couple of years back, the news that Indian companies having acquired American-European entities was very rare. However, this scenario has taken a sudden U turn. Nowadays, news of Indian Companies acquiring a foreign business is more common than other way round. Buoyant Indian Economy, extra cash with Indian corporates, Government policies and newly found dynamism in Indian businessmen have all contributed to this new acquisition trend. Indian companies are now aggressively looking at North American and European markets to spread their wings and become the global players. The Indian IT and ITES companies already have a strong presence in foreign markets, however, other sectors are also now growing rapidly. The increasing engagement of the Indian companies in the world markets, and particularly in the US, is not only an indication of the maturity reached by Indian Industry but also the extent of their participation in the overall globalization process. The sectors attracting investments by Corporate India include metals, pharmaceuticals, industrial goods, automotive components, beverages, cosmetics and energy in manufacturing; and mobile communications, software and financial services in services, with pharmaceuticals, IT and energy being the prominent ones among these.

PROFILE OF TATA GROUP OF COMPANIES

Tata Steel is part of one of Indias largest business conglomerates, the Tata Group Established by Jamsetji Tata and his extended family. The Tatas were descendants of Persian Zoroastrians who immigrated to India sometime in between the 8th and 10th centuries to escape religious persecution. Although Jamsetjis father opened an export business when Jamsetji was only a teenager, that business faced a financial crisis following the end of the U.S. Civil War and the return of U.S. producers to world markets. With Jamsetjis expert guidance, the company was reborn as Tata and Co., later to be renamed Tata and Sons in 1868. Tata Steel was founded in 1907, and the plant started production in 1912 (information about Tata group profile obtained from www.tatasteel.com). Currently, Tata Steel is now Indias largest private steelmaker, the worlds 6th largest steelmaker, and due to its ownership of raw materials (coal and iron), can produce steel at lower costs than nearly any other steelmaker in the world (www.tatasteel.com, 2007, July 23). In 2005-2006, the Tata Group had revenues of $21.9 billion (all $ amounts are referenced with respect to US $) which was approximately 2.8 percent of Indias gross domestic product. With a market capitalization of $63.0 billion in 2007, the Tata Group employs around 2,460,000 people and comprises 96 operating companies in seven business sectors: information systems and communications (Tata Consultancy Services), engineering, materials, services, energy, consumer products and chemicals. The group has 28 publicly listed firms with approximately 2 million shareholders. Operations span 85 countries on six continents and there has been an overall rapid growth through acquisition and merger activity (www.tatasteel.com, 2007, July 23). The company has been run by family members for five generations. The current chairman of Tata Group is Ratan Tata who succeeded J.R.D. Tata in 1991. At his time of succession, the Tata Group was a sprawling network of 250 companies, many doing poorly. He has since downsized the group to 96 firms. Not content to operate only in India, he has increasingly challenged his managers to expand overseas (Bary, Santoli, Laing & Racanelli,3/26/07).

The Tata Group has made a number of recent acquisitions (Leahy, 2007, May 18). Tata Tea bought out U.S.-based Eight Oclock Coffee for $220 million; a 30 percent share of Energy Drinks, another U.S. firm, for $677 million; and acquired a 33 percent share of South Africas Joekels Tea Packers. Tatas Indian Hotels bought the Ritz Carlton Boston for $170 million. Tata Motors acquired the truck operations of South Koreas Daewoo. Tata Steel had also purchased Singapores Natsteel in 2004 for $485 million and Thailands Millennium Steel for $404 million in 2005. On February 2, 2007, Tata Steel won its bid to acquire Corus, the AngloDutch steel company. The Corus acquisition by Tata Steel made it a giant among giants in India Inc. The steel conglomerate is now the largest private company by sales in India, a distinction earlier held by Reliance Industries which is now second (Knight Rider 2/2/07). The acquisition of Corus is anticipated to make Tata Steel the worlds second largest steelmaker within five years.

Tata Steel - Corporate Profile

Established in 1907, Tata Steel is Asia's first and India's largest private sector steel company. Tata Steel is among the lowest cost producers of steel in the world and one of the few select steel companies in the world that is EVA+ (Economic Value Added). Its captive raw material resources and the state-of-the-art 5 MTPA (million tonne per annum) plant at Jamshedpur, in Jharkhand State, India gives it a competitive edge. Determined to be a major global steel player, Tata Steel has recently included in its fold NatSteel, Asia (2 MTPA) and Millennium Steel (1.7 MTPA) creating a manufacturing network in eight markets in South East Asia and Pacific rim countries. Soon the Jamshedpur plant will expand its capacity from 5 MTPA to 7 MTPA by 2008. The Company plans to enhance its capacity, manifold through organic growth and investments. The Company's wire manufacturing unit in Sri Lanka is known as Lanka Special Steel, while the joint venture in Thailand for limestone mining is known as Sila Eastern. Tata Steel's products are targeted at the quality conscious auto sector and the burgeoning construction industry. With wire manufacturing facilities in India, Sri Lanka and Thailand, the Company plans to emerge as a major global player in the wire business. While the Company is focused in the pursuit of its operational goals, it is also committed to being a good corporate citizen. Tata Steel extends support to the economically underprivileged not by charity but by strengthening and empowering them with expertise and knowledge. Its community outreach programmes covers the Tata Steel managed city of Jamshedpur and over 600 villages in and around its manufacturing and raw materials operations.

Vision and Values

Diversity enriches any large organisation and enhances its collective capabilities. A clear, shared vision is a key requisite for successful diversity management. Vision

Our vision is to be the global steel industry benchmark for value creation and corporate citizenship.
We will achieve our vision through: Our conduct, by fostering teamwork, nurturing talent, enhancing leadership capability and working together with pace, pride and passion. Our offer, by developing leading-edge solutions in technology, processes and products. Our people, by becoming the supplier of choice, delivering premium products and services, and creating value in close partnership with our customers. Our innovation, by providing a safe and healthy workplace, respecting the environment, caring for our communities and demonstrating high ethical standards.

Founding Principles Since its formation by Jamsetji Tata in 1868, the Tata Group has consistently been run according to the principle that the wealth it creates should be returned to society. Jamsetji Tata believed that the health and welfare of the employees are the sure foundation of our prosperity.

The Groups stated aim is to improve the quality of life of the communities we serve. This is demonstrated constantly by its businesses through their contributions to the communities of which they are part now in over 80 countries around the world. Two thirds of the equity of Tata Groups holding company, Tata Sons, is held by philanthropic trusts. Over the decades, these trusts have benefited a vast range of medical, academic, social and cultural projects and institutions. Tata Steel was one of the main foundations on which this pioneering industrial group has continued to grow around the world. Our Values The Tata Group has always been driven by five core values:

Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny.

Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve. Excellence. We must constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide. Unity: We must work cohesively with our colleagues across the group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.

Responsibility: We must be responsible and responsive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.

Goals The Tata Steel Group is proud of its performance culture. We are committed to the pursuit of challenging targets, and to safety, environmental protection, continuous improvement, openness and social responsibility in every aspect of our business around the world. We have set ourselves four key corporate goals to achieve by 2012:

Value creation: Deliver a 30% return on invested capital (ROIC).

Safety: Achieve an industry leadership position by driving down our lost time injury frequency rate (LTIF) to a maximum of 0.4 incidents per million hours worked

Environment: Reduce carbon dioxide (CO2) emissions to less than 1.9 tonnes per tonne of crude steel (t/tls)1

People: Rank as an employer of choice in the top quartile across all industries.

CORUS CORPORATE PROFILE

The London-based Corus Group is one of the world's largest producers of steel and aluminium. Corus was formed in 1999 following the merger of Dutch group Koninklijke Hoogovens N.V. with the UK's British Steel Plc on October 6, 1999. It employs 47,300 people worldwide and 24,000 people in the United Kingdom.

Corus is a leading European manufacturer providing steel and aluminium products and services worldwide. The company is comprised of four Divisions; Strip Products, Long Products, Distribution & Building Systems and Aluminium2, and has a global network of sales offices and service centres. It focuses on semi-finished and finished carbon steel products and is not involved in iron ore extraction.

Corus is Europes second largest steel producer with revenues in 2005 of 9.2 billion (US$18 billion and crude steel production of 18.2 million tonnes, primarily in the UK and the Netherlands. Corus provides innovative solutions to the construction, automotive, packaging, mechanical

engineering and other markets worldwide. Tata acquired Corus, which is 4 times larger than its size and the largest steel producer in the U.K. The deal, which creates the worlds fifth largest

steelmaker, is Indias largest ever foreign takeover and follows mittal steels $31 billion acquisition of rival arcelor in same year.

Tata acquires Corus on the 2nd of April 2007 for a price of $12 billion. The price per share was 608 pence, which is 33.6% higher the first offer which was 455 pence.

For the fiscal year ended March 2006, the company generated revenues of $3,693.6million (INR17, 144.22 Crores), an increase of 0.1% over the previous fiscal year. The company saw a net income of $755.4 million (IR3,506.38 Crores), an increase of 8%over fiscal 2005 months.

BUSINESS CULTURES OF TATA STEEL AND CORUS

TATA STEEL
Continuous improvement programme ASPIRE

CORUS
Continuous improvement programme The Corus way

Core values: Trusteeship Integrity Respect for Individual Credibility Excellence World class governance

Core values: Code of ethics Integrity Creating value in Steel Customer focus Selective growth Respect for our people World class governance

SWOT ANALYSIS OF TATA STEEL

SWOT ANALYSIS OF CORUS

Worlds ninth largest and Europes second largest steel producer. - Wide range of products of high technology.

- High operational Cost. - Lack of Access to raw material

SWOT
- To merge with a company to eliminate duplication and remove overlaps in marketing, accounting etc. - To get access to raw material and growth markets through merger. - Increasing losses resulting to winding up of company -

REASONS FOR TATA STEEL TO BID

To tap European Mature Market. Cost of acquisition is lower than setting up of Green field plant & marketing and distribution channel. TATA manufactures Low Value, long and flat steel products, while Corus produce High Value Stripped products. Helped TATA to feature in Top 10 players in world. Technology Benefit. Economic of scale. Corus holds number of patents and R&D facilities.

REASONS FOR CORUS FOR ACCEPTING BIDS To extend its Global reach through TATA. To get access to Indian Ore reserves, as well as virgin market for steel. To get access to low cost materials. Saturated market of Europe. Decline in market share and profit.

The Deal
The deal (between Tata & Corus) was officially announced on April 2nd, 2007 at a price of 608 pence per ordinary share in cash. This deal is a 100% acquisition and the new entity will be run by one of Tatas steel subsidiaries. As stated by Tata, the initial motive behind the completion of the deal was not Corus revenue size, but rather its market value. Even though Corus is larger in size compared to Tata, the company was valued less than Tata (at approximately $6 billion) at the time when the deal negotiations started. But from Corus point of view, as the management has stated that the basic reason for supporting this deal were the expected synergies between the two entities. Corus has supported the Tata acquisition due to different motives. However, with the Tata acquisition Corus has gained a great and profitable opportunity to make an exit as the company has been looking out for a potential buyer for quite some time. The total value of this acquisition amounted to 6.2 billion (US$12 billion). Tata Steel the winner of the auction for Corus declares a bid

of 608 pence per share surpassed the final bid from Brazilian Steel maker Companhia Siderurgica Nacional (CSN) of 603 pence per share. Prior to the beginning of the deal negotiations, both Tata Steel and Corus were interested in entering into an M&A deal due to several reasons. The official press release issued by both the company states that the combined entity will have a pro forma crude steel production of 27 million tones in 2007, with 84,000 employees across four continents and a joint presence in 45 countries, which makes it a serious rival to other steel giants. The official declaration of the completed transaction between the two companies was announced to be effective by Court of Justice in England and Wales and consistent with the Scheme of Arrangement of the Tata Steel Scheme on April 2, 2007. According the Scheme regulations, Tata Steel is required to deliver a consideration not later than 2 weeks following the official date of the completion of the transaction.

The process has started on September 20, 2006 and completed on July 2, 2007. In the process both the companies have faced many ups and downs. The details of this process has described below. September 20, 2006: Corus Steel has decided to acquire a strategic partnership with a Company that is a low cost producer October 5, 2006: The Indian steel giant, Tata Steel wants to fulfill its ambition to Expand its business further.

October 6, 2006: The initial offer from Tata Steel is considered to be too low both by Corus and analysts. October 17, 2006: Tata Steel has kept its offer to 455p per share. October 18, 2006: Tata still doesnt react to Corus and its bid price remains the same. October 20, 2006 : Corus accepts terms of 4.3 billion takeover bid from Tata Steel October 23, 2006: The Brazilian Steel Group CSN recruits a leading investment bank to offer advice on possible counter-offer to Tata Steels bid. October 27, 2006: Corus is criticized by the chairman of JCB, Sir Anthony Bamford, for its decision to accept an offer from Tata. November 3, 2006: The Russian steel giant Severstal announces officially that it will not make a bid for Corus November 18, 2006: The battle over Corus intensifies when Brazilian group CSN approached the board of the company with a bid of 475p per share. November 27, 2006 : The board of Corus decides that it is in the best interest of its will shareholders to give more time to CSN to satisfy the preconditions and decide whether it issue forward a formal offer December 18, 2006: Within hours of Tata Steel increasing its original bid for Corus to 500 pence per share, Brazil's CSN made its formal counter bid for Corus at 515 pence per share in cash, 3% more than Tata Steel's Offer.

January 31, 2007: Britain's Takeover Panel announces in an e-mailed statement that after an auction Tata Steel had agreed to offer Corus investors 608 pence per share in cash April 2, 2007: Tata Steel manages to win the acquisition to CSN and has the full voting support form Corus shareholders

FINANCING THE DEAL Total Tata Corus deal - US $13.7 billion Equity component US $ 7.56 billion. Debt Component - US $ 6.14 billion. Acquisition was completed through Tata Steels UK Special Purpose vehicle (SPV) named Tata Steel UK. This SPV raised US $ 6.14 billion through a mix of high yield mezzanine and long term debt funding. For immediate financing Tata Steel UK raised US $ 2.66 bn through bridge loans.

SPREAD OF MARKETS

BEFORE THE ACQUSITION

INDIA 8% ASIA (ex India) 23% ROW 69%

AFTER THE ACQUISITION

NORTH AMERICA 8% ROW 9%

EUROPE 37%

UK 22%

ASIA 24%

MARKET REACTION
Tata Steel share prices fell upon announcement of the acquisition and continued to slide during the next two months. After a battering of two-and-a-half months (in December), shares of Tata Steel staged a partial recovery with a gain of over 5 percent with some market players speculating that the company might withdraw its bid to acquire Anglo-Dutch steelmaker Corus. Tata Steel shares had lost about 20 per cent ever since the reports first poured early in October that it was planning to acquire Corus, as it was felt that the costly takeover would have an adverse impact in the company's balance sheet. The brokers said the deal might have significant long-term synergies, but market players were worried about the adverse impact in the short term. Tata Steel's share price closed 5.4 per cent higher at Rs 459.25, after hitting an intra-day high of Rs 461.45 at the Bombay Stock Exchange. However, the stock was still 14 per cent below the level it was trading at in the beginning of October. Interestingly, the CSN stock price went up when it announced its bid.

IMPACT OF CORUS ACQUISITION ON INDIAN CORPORATE MORALE

There was tremendous outpouring of nationalistic euphoria and economic patriotism in the Indian press after this deal. During the early weeks of 2007, The Times of India the bestselling English daily newspaper, was reportedly inviting its readers to discuss the new India poised for global supremacy Johnson, 2007, February 3). The Tata deal has fed an unmistakable undertone of triumph as the countrys status as the worlds second fastest growing economy. The Economic Times, Indias best selling business newspaper reported For India, this deal is not about sizeits the first step towards what we call the Global Indian Takeover. (Johnson, 2007, February 3). According to Ratan Tata, who spoke at the time of the acquisition, Its a tremendous strategic acquisition. I believe this will the first step in showing that Indian industry can in fact step outside the shores of India in an international marketplace and acquit itself as a global player (International Herald Tribune, 2007, January 30). Kamal Nath (Johnson, 2007 January 15, 4), the Indian Minister for Commerce and Industry felt that the global perception of India is Changingits a two-way street now.not only is India seeking foreign investment, but Indian companies are emerging investors in other countries. The Confederation of Indian Industry, Indias largest business association described the acquisition as path breaking which would enable emerging Indian firms to gain greater respect from the global business community. For the first time in 2006, overseas acquisitions by Indian firms exceeded the value of foreign companies buying in India. During the first six months of 2006, Indian companies had completed approximately 78 cross-border acquisitions worth $5.2 billion. For the year ending 2006, outbound deals by Indian companies totaled $22.4 billion compared with $11.3 billion in purchases from abroad. (Harris 2007, March 9). Indian business executives attribute this new confidence in part to a decade of restructuring that started in 1991 when

newly drafted laws allowed greater foreign competition. Others point to the successes of Indian based firms such as Infosys Technologies, Wipro and TCS who have proven to be world class competitors from a cost/quality perspective. In the wake of Tata Steels acquisition of Corus, the chief executive of ICICI, Indias second largest bank, proposed that Indian firms now have the confidence to go out and buy buoyed by substantial corporate profits which have provided large cash surpluses over the last 18 quarters. He believed that the Tata-Corus deal would most likely lead to a string of takeovers in the UK by Indian companies (Knight Rider, 2007, April 27). An article published in the Wall Street Journal predicted a global shopping spree by Indian companies due to easier access to funds, an annual growth rate of over 8%, and a strong desire to engage in worldwide competition (Range, 2007). In the first two months of 2007, Indian companies seeking new technology, better overseas market access, and greater production capacity arranged or closed on foreign purchase deals worth $21 billion. Mr. P. K. Vijayaraghavan, Associate Director, PricewaterhouseCoopers Private Ltd. spoke on the importance of corporate restructuring for India and noted that Tata Steels acquisition of Corus was an outstanding example of Indian corporate thinking. (Business line, 2007, March 8). The easy availability of global funds drove many Indian companies toward acquisitions following the Tata Steel acquisition of Corus which spurred transactions from rivals such as Essar group taking over two steel companies in North America. Indias largest bank, State Bank of India which is government-controlled, and ICICI, Indias largest private bank responded to the surge in deal-making and investment by raising capital. The banking sector is facing a growing need for capital because of the expected rise in capital expenditure by the corporate sector over the next few years to meet funding requirements. (Leahy, 2007, July 7) A proposed amendment to Competition (Amendment) Bill of 2006 and the Competition Act (2002) required companies undertaking mergers or acquisitions in India or overseas to compulsorily report the proposal to the Competition Commission of

India before making such a deal. The proposal would limit acquisitions that might have an appreciably adverse effect on competition within India markets. The dollar limit thresholds are $2 billion if the acquirer is a group in India and $6 billion if the acquirer is outside of India (Business line, 2007, May 6). Cross-border mergers and acquisitions have gained tremendous popularity among Indian executives as a means to achieve growth and secure a global presence. According to David (2007), there are numerous seminars dealing with mergers and acquisitions where seasoned M&A executives offer advice on a number of topics ranging from government rules and regulations, pitfalls to avoid, and cultural issues impacting post-merger scenarios.

SYNERGIES FROM THE DEAL

Tata was one of the lowest cost steel producers & Corus was fighting to keep its productions costs under control. Tata had a strong retail and distribution network in India and SE Asia. Hence there would be a powerful combination of high quality developed and low cost high growth markets. Technology transfer and cross-fertilization of R&D capabilities. There was a strong culture fit between the two organizations both of which highly emphasized on continuous improvement and Ethics. Economies of Scale. Increase in profitability. Backward integration for Corus and Forward integration for Tata Steel.

The Road Ahead

Integration has to be fast and efficient. Increasing reach to joint entity to 4 continents and 45 countries including high value market of Europe. Increasing the EBITDA to 25% for joint entity by executing Tata steels Brownfield and Greenfield projects well in time. Increasing the capacity of the company beyond 50 million tons by 2015 so as to become one of 3 top steel producers in the world.

CONCLUSION
With Corus in its fold, Tata steel can confidently target becoming one of the top 3 steel makers globally by 2015.The company would have an aggregate capacity of close to 56 million tonnes per annum, if all the planned Greenfield capacities go on stream by then. We can conclude that if the acquisitions well planned , Executed and the necessary precautions taken for the deal a company can achieve its strategic objectives and thus ensure its strategic objectives and thus ensure its growth through acquisitions.

I believe this will be the first step in showing that Indian industry can

step outside the shores of India in an international market place and acquit itself as a global player

- Ratan Tata

COMPETITORS

Rashtriya Ispat Nigam Limited Steel Authority of India Tata Steel Visveswarayya Steels Bokaro Steel Plant Bhilai Steels Essar Steels Limited Jindal Steel & Power KVS Ispat Jindal Steels Limited