Former Tata Steel VC rebuts Mistry charges on Corus buy

In a strong rebuttal to ousted Tata Group Chairman Cyrus Mistry, former vice chairman and MD of Tata Steel B Muthuraman today said buying Corus was a well thought out decision and the acquisition price was only 50 million pounds higher than the next bidder.
Amid the ongoing war of words with Tatas since his ouster last month, Mistry had claimed yesterday that Ratan Tata's "ego" led to "overpayment" for UK steelmaker Corus.
Muthuraman, who was the head of Tata Steel when the acquisition was made in early 2007, rubbished the remarks as "frivolous and unconsidered comments", saying he was surprised and very sad at "the speculative and biased views".

Mistry had stated that some board members had reservation to Ratan Tata pushing for the acquisition of Corus for more than USD 12 billion, as a year earlier it was available at half that price.
"The long term strategy of Tata Steel was well thought out after a lot of deliberation to grow the company through capacity expansion in India and internationally through inorganic growth.
"The overseas growth strategy was also to focus on accessing new markets through acquisitions, enhance the technology capability of the company and develop high end premium products," Muthuraman said in a statement.

Giving reasons for the acquisition, he said following the successful acquisition of NatSteel in Singapore and Millennium Steel in Thailand, Corus Group plc provided "a natural fit for the portfolio especially since the Netherlands facilities which is the gold standard in competitive positioning were part of the asset perimeter".

The Board of Tata Steel, he said, was "deeply involved" in all the deliberations and approved the transaction.
"The value of Corus increased since the initial bid in line with the commodity price boom, its underlying performance and the transaction process," he said, adding that the acquisition was through a transparent auction process managed by the takeover regulator in the UK.
The price paid by Tata was just "50 million pounds higher than the next bidder", he said.
In the first two years of the acquisition itself, Corus had an average annual EBIDTA of over 1 billion pounds which justified the reasonableness of the acquisition.

But the sudden and unprecedented scale of the global financial crisis in 2008 had "a very significant adverse impact on the industry fundamentals in Europe which also impacted the performance of Corus", he added.
Tata Steel also came out with a strongly worded statement dismissing as "unsubstantiated" allegations about Corus acquisition saying the transaction was extensively deliberated and approved by the company board.
Under Mistry, who was last month abruptly sacked as
chairman of the holding company of India's largest conglomerate Tata Sons, the group put up for sale Europe's second largest steel maker Corus due to its "deteriorating financial performance".

Tata Steel said the performance of Corus post acquisition validated the strategy till the black swan event of the global financial crisis structurally impacted the underlying demand conditions in Europe causing financial hardship to the entire industry.
"The entire acquisition was undertaken by following due Board governance process under the supervision and oversight of the Board of the Company. The acquisition proposal was extensively deliberated in the Board and the Board approved the transaction," it said.
Tata Steel said it had made appropriate disclosures at various stages of the transaction to the regulators during years 2006 and 2007. "These disclosures are available on the websites of the stock exchanges".