All but Tata could see the hubris of buying Corus. (2016)

“It was … up there with Lloyds’ merger with HBOS or Royal Bank of Scotland’s acquisition of ABN Amro in the roll call of disastrously ill-judged takeovers.

Jeremy Warner
The Telegraph: Business (online) 2 April 2016

“…it was frankly obvious to virtually everyone other than Tata Steel itself, and its massed ranks of fee hungry investment bankers, that the company was buying a pig in a poke when it acquired Corus, together with its Port Talbot steel works, for £6.7bn in 2007 …

“This was a classically hubristic, top of the market deal by a Indian conglomerate with more money than sense, and it always looked destined to end badly. The biggest mystery was why a low cost, emerging market producer such as Tata would want to buy into the declining, high cost industrial infrastructure of the west in the first place, let alone pay such an inflated price for it.

“Yet there was always an element of post-colonial triumphalism about this transaction. Ratan Tata, then chairman of Tata Steel, described it as “a moment of great fulfilment for India”, as if the symbolism of acquiring such a prize in the imperial birth place of mass produced steel was more important than any commercial justification.

“The other factor was keeping up with the Jones.

“Tata’s great rival, the Indian steel mogul Lakshmi Mittal, had just bought another European steel maker, Arcelor, and Tata was determined not to be outdone. So when CSN announced an agreed merger with Corus, Tata pounced and wildly outbid the Brazilian pretenders.

“It was brilliant news for Corus shareholders, a lucky escape for CSN, and one of the worst mistakes Tata has ever made, up there with Lloyds’ merger with HBOS, or Royal Bank of Scotland’s acquisition of ABN Amro in the roll call of disastrously ill-judged takeovers.”

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