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See all Premium member Presentation Transcript Slide 1: LEVERAGED BUYOUTS Presented by: Priya Jain PGDM IV Semester … A Case Study of Tata - Corus BBDNITM Slide 2: APPROACH LEVERAGED BUYOUTS A CASE STUDY OF TATA CORUS CONCLUSION Slide 3: LEVERAGED BUYOUTS Slide 4: LBO : MEANING Acquisition of a target company with a substantial portion of borrowed funds Leverage : Significant use of debt for financing the transaction Buyout : Gain of control of majority of the target company’s equity It is also known as private equity A technique of corporate restructuring Average life of 3-7 years after which investors take the firm public Investors seek return in excess of 20 % on its investment Leverage usually ranges from 6:1 to 12:1 Slide 5: LBO : ADVANTAGES & DISADVANTAGES ADVANTAGES DISADVANTAGES Flexible structure of financing Tax shield Larger levels of debt - increased risk Too high a price asked for by a seller Lay-offs increase Long-term growth disrupted as company focuses on short-term goal of reducing debt at the cost of R&D Dilution in equity and increase in number of owners raises conflict in management Discipline of debt helps leads to divesting non-core business cost-cutting Synergy and efficiency gains Slide 6: LBO : FINANCING The various sources of LBO financing are: LOAN STOCK SENIOR DEBT SUBORDINATED DEBT MEZZANINE FINANCING PREFERENCE SHARES ORDINARY SHARES ESOPs BRIDGE FINANCING BANK FINANCING Slide 7: A CASE STUDY OF TATA-CORUS Slide 8: OVERVIEW OF ACQUIRER Name : Tata Steel Former Name : Tata Iron and Steel Company Limited Founded : 1907 Type : Public (BSE: 500470) Headquarters : Jamshedpur, Jharkhand, India Chairman : Ratan Tata Founder : Jamsetji Nusserwanji Tata Industry : Steel Parent : Tata Group Logo : Slide 9: OVERVIEW OF TARGET Name : Corus Founded : 1999 Type : Subsidiary Headquarters : London, England, U.K. CEO : Kirby Adams Formation : Merger of British Steel Corporation and Koninklijke Hoogovens N.V. Industry : Steel Parent : Tata Steel, member of Tata Group Logo : Slide 10: THE DEAL Official Announcement : April 2nd, 2007 Price of Deal : 608 pence per ordinary share in cash Total Value of the Deal : £6.2 billion (US $12 billion) Deal Competitor : Companhia Siderurgica Nacional (CSN) Competitor’s Bid: 603 pence per share Deal process commencement : September 20, 2006 Deal process completion : July 2, 2007 Slide 11: COMBINED AMBITION Become a global player with a balanced presence in developed European and fast growing Asian markets Acquire strong positions in construction, automotive and packaging market sectors Significant raw material security and greenfield / brownfield developments Lowest cost position in Europe and South-East Asia Own developmental plans Current : EBITDA of 13% ; 25 million tonnes : # 6 By 2012 : EBITDA of 25% ; 40 million tonnes : Potential # 2 DOUBLE THE SIZE AND PROFITABILITY Slide 12: DEAL : INVESTMENT VEHICLE A holding company was set up by Tata Steel in Singapore to acquire Corus. Idea was to have all the foreign acquisitions under one holding company. Singapore has a favourable tax jurisdiction and gave Tata Steel an easy avenue for raising global resources/funds. TATA STEEL INDIA TATA STEEL ASIA HOLDINGS (SINGAPORE) TATA STEEL U.K. CORUS GROUP LTD. U.K. Slide 13: DEAL : FINANCING STRUCTURE Slide 14: DEAL : FINANCING STRUCTURE Slide 15: POST-ACQISITION INTEGRATION COMMITTEE Slide 16: CULTURAL INTEGRATION Slide 17: EFFECTS OF THE DEAL ENHANCED PRODUCT PORTFOLIO RAW MATERIAL SELF-SUFFICIENCY Slide 18: EFFECTS OF THE DEAL ENHANCED CUSTOMER REACH Slide 19: EFFECTS OF THE DEAL ACCESS TO NEW MARKETS Slide 20: RANKING RANKING AS PER CAPACITY RANKING AS PER PRODUCTION Slide 21: CONCLUSION Ratan Tata, Chairman of Tata Steel, said: “This 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.” Slide 22: LEVERAGED BUYOUTS … A Case Study of Tata - Corus THE END You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
leveraged buyouts case study -tata corus priyajain786 Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 5015 Category: Business & Fin.. License: All Rights Reserved Like it (8) Dislike it (0) Added: July 28, 2009 This Presentation is Public Favorites: 6 Presentation Description No description available. Comments Posting comment... By: praeevihu (9 month(s) ago) i felt this presentation is more updated.and for my academic purpose i will be need of this tata- corus -lbo presentation. so please permit me to down load this presentation. Saving..... Post Reply Close Saving..... Edit Comment Close By: praeevihu (9 month(s) ago) i felt this presentation is more updated.and for my academic purpose i will be need of this tata- corus -lbo presentation. so please permit me to down load this presentation. Saving..... Post Reply Close Saving..... Edit Comment Close By: priyajain786 (13 month(s) ago) hi guys n gals...thnks 4 liking d ppt....its 4 help...u all must be competent enough to succeed on ur own....plz make ppt on ur own...! All the best ! Saving..... Post Reply Close Saving..... Edit Comment Close By: tushar_xp1 (14 month(s) ago) it is nice presentation Saving..... Post Reply Close Saving..... Edit Comment Close By: abhishek_rajani (15 month(s) ago) it is a nice presentation Saving..... Post Reply Close Saving..... Edit Comment Close loading.... See all Premium member Presentation Transcript Slide 1: LEVERAGED BUYOUTS Presented by: Priya Jain PGDM IV Semester … A Case Study of Tata - Corus BBDNITM Slide 2: APPROACH LEVERAGED BUYOUTS A CASE STUDY OF TATA CORUS CONCLUSION Slide 3: LEVERAGED BUYOUTS Slide 4: LBO : MEANING Acquisition of a target company with a substantial portion of borrowed funds Leverage : Significant use of debt for financing the transaction Buyout : Gain of control of majority of the target company’s equity It is also known as private equity A technique of corporate restructuring Average life of 3-7 years after which investors take the firm public Investors seek return in excess of 20 % on its investment Leverage usually ranges from 6:1 to 12:1 Slide 5: LBO : ADVANTAGES & DISADVANTAGES ADVANTAGES DISADVANTAGES Flexible structure of financing Tax shield Larger levels of debt - increased risk Too high a price asked for by a seller Lay-offs increase Long-term growth disrupted as company focuses on short-term goal of reducing debt at the cost of R&D Dilution in equity and increase in number of owners raises conflict in management Discipline of debt helps leads to divesting non-core business cost-cutting Synergy and efficiency gains Slide 6: LBO : FINANCING The various sources of LBO financing are: LOAN STOCK SENIOR DEBT SUBORDINATED DEBT MEZZANINE FINANCING PREFERENCE SHARES ORDINARY SHARES ESOPs BRIDGE FINANCING BANK FINANCING Slide 7: A CASE STUDY OF TATA-CORUS Slide 8: OVERVIEW OF ACQUIRER Name : Tata Steel Former Name : Tata Iron and Steel Company Limited Founded : 1907 Type : Public (BSE: 500470) Headquarters : Jamshedpur, Jharkhand, India Chairman : Ratan Tata Founder : Jamsetji Nusserwanji Tata Industry : Steel Parent : Tata Group Logo : Slide 9: OVERVIEW OF TARGET Name : Corus Founded : 1999 Type : Subsidiary Headquarters : London, England, U.K. CEO : Kirby Adams Formation : Merger of British Steel Corporation and Koninklijke Hoogovens N.V. Industry : Steel Parent : Tata Steel, member of Tata Group Logo : Slide 10: THE DEAL Official Announcement : April 2nd, 2007 Price of Deal : 608 pence per ordinary share in cash Total Value of the Deal : £6.2 billion (US $12 billion) Deal Competitor : Companhia Siderurgica Nacional (CSN) Competitor’s Bid: 603 pence per share Deal process commencement : September 20, 2006 Deal process completion : July 2, 2007 Slide 11: COMBINED AMBITION Become a global player with a balanced presence in developed European and fast growing Asian markets Acquire strong positions in construction, automotive and packaging market sectors Significant raw material security and greenfield / brownfield developments Lowest cost position in Europe and South-East Asia Own developmental plans Current : EBITDA of 13% ; 25 million tonnes : # 6 By 2012 : EBITDA of 25% ; 40 million tonnes : Potential # 2 DOUBLE THE SIZE AND PROFITABILITY Slide 12: DEAL : INVESTMENT VEHICLE A holding company was set up by Tata Steel in Singapore to acquire Corus. Idea was to have all the foreign acquisitions under one holding company. Singapore has a favourable tax jurisdiction and gave Tata Steel an easy avenue for raising global resources/funds. TATA STEEL INDIA TATA STEEL ASIA HOLDINGS (SINGAPORE) TATA STEEL U.K. CORUS GROUP LTD. U.K. Slide 13: DEAL : FINANCING STRUCTURE Slide 14: DEAL : FINANCING STRUCTURE Slide 15: POST-ACQISITION INTEGRATION COMMITTEE Slide 16: CULTURAL INTEGRATION Slide 17: EFFECTS OF THE DEAL ENHANCED PRODUCT PORTFOLIO RAW MATERIAL SELF-SUFFICIENCY Slide 18: EFFECTS OF THE DEAL ENHANCED CUSTOMER REACH Slide 19: EFFECTS OF THE DEAL ACCESS TO NEW MARKETS Slide 20: RANKING RANKING AS PER CAPACITY RANKING AS PER PRODUCTION Slide 21: CONCLUSION Ratan Tata, Chairman of Tata Steel, said: “This 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.” Slide 22: LEVERAGED BUYOUTS … A Case Study of Tata - Corus THE END