Tata-Corus to firm up steel prices : Essar

Our Corporate Bureau
31 January 2007

It has been a busy morning for the markets, because the news broke early in the morning that Tatas have snapped up Corus for 608 pence / share, valuing it at more than $11 billion.

But what does this mean for their balance sheet in the near term and what could it mean in terms of a strategic benefit going forward for the long-term? J Mehra, director, Essar Group shares his perspective.

CNBC-TV18 shares with domain-b its exclusive interview with Mehra:

Candidly, 608 - is it a high price or is it okay?
I think it is just a little over what one would have expected it to end at. But considering the advantages that they were getting in terms of acquisition over a longer period of time, it should be okay.

Would you have paid this price, if you were in their shoes?
If you had the kind of money that the Tatas are able to muster, I think this is a good deal because after this you do not have many more deals of this kind available. If one has to be a global player, these are the risks involved and I think that the point about the pricing cycle has been talked about.

There is volatility in steel pricing, but the consolidation is a step towards controlling that volatility. And I think that this consolidation is a process, which will bring some stability in the pricing and if this happens, I think this deal may look as overpriced at this point in time, may really pull off in the long run.