Tata Metaliks-Tata Metaliks DI Pipes merger plan called off

Tata Steel today said the merger scheme was not effective because the petition filed by Tata Metaliks in the Calcutta HC for approval was pending

Tata Steel, the country's largest steel producer, has recalled its plan sent to the Bombay High Court for a merger of Tata Metaliks and Tata Metaliks DI Pipes with itself.

In a notification to the stock exchanges, Tata Steel today said the merger scheme was not effective because the petition filed by Tata Metaliks in the Calcutta High Court for approval was pending.

Accordingly, Tata Metaliks had been advised to consider withdrawing the scheme with a leave to re-file a fresh one for merger of Tata Metaliks DI Pipes with itself, said Tata Steel.

Tata Metaliks would continue to be a subsidiary of Tata Steel, the company said.

“The decision is based on careful consideration of various factors, including inordinate delay in obtaining the requisite regulatory and statutory approvals along with significant dilution in the intended synergies that were envisaged in April 2013. With today's decision, Tata Metaliks will continue to operate as a subsidiary of Tata Steel,” said Koushik Chatterjee, group executive director, finance and corporate, Tata Steel.

According to the scheme, for every 29 shares of Tata Metaliks, shareholders would receive 4 shares of Tata Steel.

The share price of Tata Steel is hovering around Rs 326 while Tata Metaliks is at Rs 140 on the Bombay Stock Exchange.

“From the swap ratio it is clear the deal was extremely raw for shareholders of Tata Metaliks,” said Pritesh Jani, analyst with Religare Securities.

Tata Metaliks with a consolidated net debt of Rs 279 crore had a debt-equity ratio of 9.35 at the end of 2014-15.

Tata Metaliks' parent Tata Steel is also currently engaged in selling its loss-making business in the UK. Last week, Tata Steel accepted seven expressions of interest for the sale of its UK business and in the next phase of the sales process the progressing interested parties will be given access to further business information and management team presentations in order for them to rapidly progress their interest to a binding stage.

Tata Steel, the country's oldest steel making company, has been grappling to do-away with its loss-making business in Europe as the company has been facing severe financial drain-out due to longer-than-stipulated hostile business cycle.