The?Tata Group?has announced the merger of seven of its metal companies into?Tata Steel, which is an attempt to consolidate its metal business to drive efficiencies and reduce costs.?Tata Steel Long Products, The Tinplate Company of India, Tata Metaliks, TRF Limited, Indian Steel & Wire Products, Tata Steel Mining, and S&T Mining Company are among the seven Tata Steel subsidiaries.
The amalgamation with their parent company, Tata Steel, has been approved by the company¡¯s board..
As per the ET report, the decision was taken at a board meeting of the company held yesterday.??
Meanwhile, the company has withdrawn from the earlier merger?scheme of Tata Metaliks and Tata Steel Long Products (TSPL).
Share swap ratios?under the merger scheme would reportedly be like this-Tata Steel vs TRF: 17:10 (17 shares of Tata Steel for every 10 shares of TRF), Tata Steel vs TSPL: 67:10 (67 shares of Tata Steel for every 10 shares of TSPL), Tata Steel vs Tinplate: 33:10 (33 shares of Tata Steel for every 10 shares of Tinplate), Tata Steel vs Tata Metaliks: 79:10 (79 shares of Tata Steel for every 10 shares of Tata Metaliks)
Explaining the?rationale?behind the merger scheme,?Tata Steel said that the resources of the merged entities can be pooled to unlock the opportunity for creating shareholder value.??
Besides citing other synergies, Tata Steel also said the mergers will result in the utilisation of each other¡¯s facilities in a more efficient manner. Marketing and distribution networks of both entities can be collaborated, it said.
"In line with group level 5S strategy ¨C simplification, synergy, scale, sustainability, and speed ¨C proposed Scheme will simplify group holding structure, improve agility to enable quicker decision making, eliminate administrative duplications, consequently reducing administrative costs of maintaining separate entities," stated the Tata Steel.
On ISWP (Indian Steel & Wire Products), Tata Steel said the amalgamation will ensure the creation of a combined entity, leading to ¡®One-Tata Steel¡¯ in front of customers, which will improve shareholder value of the merged entity.
Also, the mega-merger plan would reportedly require the?approval?of?shareholders?of all the seven companies, as well as those of Tata?Steel, regulatory bodies, and stock exchanges.
Also Read:?Tata Steel?To Invest Rs 12,000 Crore On India & Europe Operations
In reaction to the mega merger announcement, Tata Steel's stock price today rallied around 4% to Rs 107.90 on the BSE and NSE in intra-day trade.? And the?stock prices of the 'to be merged' subsidiaries, including?Tata?Steel Long Products, Tata Metaliks, Tinplate Company of India Limited, etc, are down over 8%, 3%, and 6%, respectively.??
Also Read:?Tata Sons?Planning To Raise $4 Billion Capital For Air India
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