Even as expecting a synergy of operations in various sectors from the day one, Tata Steel is expected to close the acquisition of Corus Group Plc by middle of January 2007.
Earlier, Tata Steel had made an offer to buy out UK-based Corus at 455 pence per share taking the enterprise value of the company to $10 billion. The board of Corus has accepted and has recommended to its shareholders at the same price.
Tata Steel Managing Director B Muthuraman said, "I see tremendous synergies with Corus from day one in various sectors such as operations, maintenance, logistics, customer services and other areas. Though I cannot quantify the synergy, the strength of Corus will supplement Tata Steel in different areas."
Tata Steel could send slabs and semi-finished steel products to plants of Corus in the UK so that cut cost in finished products. Moreover, Corus is closer to the high-end market.
Industry analysts said steel prices in the UK are higher than average global steel prices.
However, he refused to comment from where he will be sourcing slabs, adding, 'slabs are available all over the world'.
Muthuraman said even without sending slabs or semi-finished products there could be synergy in various sectors - "There is a clear and compelling reason to have relationship with Corus. With Corus, Tata Steel is going to be world-class operational platform as there is natural synergy in automobiles, construction and packaging."
"With the boom in the sector, Tata Steel will focus more on automotive industry. Our sales to the automotive sector has gone up by 30 percent while galvanised products sales to automotive sector has gone up by 53 percent. The company has secured technical approvals from global auto majors such as Ford, Nissan, Caterpillar and Hyundai," Muthuraman said.
"Quality of the operations is going to be high post-Corus acquisition. While Tata Steel has got 100 persons in research and development, Corus has got over 950 persons. This is going to make significant difference," Muthuraman said.
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