After three months of boastful speeches, the deed was done... Ratan Tata has won, if not anything else for his losing shareholders, the biggest of ego battles (not counting his Singur infamy). Ratan Tata finally raised a toast – perhaps all he can afford now – on January 30, 2007, for having knocked out Brazil’s CSN to gain control over the Anglo-Dutch steel-maker Corus for an obscenely high $12 billion – a per share price of 608 pence and an amount 34% higher than its initial offer! So while some praised the deal, a closer look proves how the deal is well redefining ‘corporate insanity’!
Hitesh Agarwal, Sr. Research Analyst ,Angel Broking, justifies Tata’s aggression with, “...the possible synergies over the long-term.” Sadly, in the long term, especially in this industry, everybody’s dead! Pricing is a no-brainer, for starters. Abul Fateh, Analyst, Parag Parikh Financial, agrees, “The reasonable price range would have been between 500 to 550 pence per share. Tatas have paid so much for a company, which was available for a few million dollars a few years back!” Worse, Corus (which was born out of a disastrous merger in 1999) shares honours with the worst performers in corporate history when its shareholders saw their wealth erode by 96% during the post merger years till 2004.
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Hitesh Agarwal, Sr. Research Analyst ,Angel Broking, justifies Tata’s aggression with, “...the possible synergies over the long-term.” Sadly, in the long term, especially in this industry, everybody’s dead! Pricing is a no-brainer, for starters. Abul Fateh, Analyst, Parag Parikh Financial, agrees, “The reasonable price range would have been between 500 to 550 pence per share. Tatas have paid so much for a company, which was available for a few million dollars a few years back!” Worse, Corus (which was born out of a disastrous merger in 1999) shares honours with the worst performers in corporate history when its shareholders saw their wealth erode by 96% during the post merger years till 2004.
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