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Tata Steel board approves merger of 7 Tata group metal companies with itself in mega consolidation drive

Tata Steel board has approved the merger of seven of its metal companies into Tata Steel. Of the seven companies to be merged into Tata Steel, four are listed on the exchanges, while the rest are unlisted

Tata Steel board approves merger of 7 Tata group metal companies with itself in mega consolidation drive
Big consolidation drive at Tata Steel: Board approves amalgamation of 7 subsidiaries with Tata Steel (Pic Reuters)

Tata Steel board has approved the scheme of amalgamation between seven of its group companies and itself, as per the company’s exchange filing. The decision was taken at a board meeting of the company held on Thursday, the exchange filing said. The company has withdrawn the earlier merger scheme of Tata Metaliks and Tata Steel Long Products. As per the new amalgamation plan, all the Metal companies of the Tata group including Tata Metaliks, TRF, Tata Steel Mining, Indian Steel & Wire Pdts, S&T Mining, Tata Steel Long Pdts, and Tinplate will be merged into Tata Steel. Of the seven companies to be merged into Tata Steel, four are listed on the exchanges, while the rest are unlisted.

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The scheme of amalgamation was reviewed and recommended to the board by the committee of independent directors and the audit committee. Explaining the rationale behind the merger scheme, Tata Steel said in the filing that the resources of the merged entities can be pooled to unlock the opportunity for creating shareholder value. Besides citing other synergies, it also highlighted that the mergers will result in utilisation of each other’s facilities in a more efficient manner. Marketing and distribution networks of all entities can collaborate.

“In line with group level 5S strategy – simplification, synergy, scale, sustainability, and speed – 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,” Tata Steel said. The resulting corporate holding structure is expected to bring enhanced agility to business ecosystem of the merged entity. The share exchange ratio has been decided individually for the seven companies, according to the filing.

Share-swap ratio for all the companies in question, according to the regulatory filing is:

Tata Steel Long Products: 67 shares of Tata Steel for every 10 shares held
Tinplate Company of India: 33 shares of Tata Steel for every 10 shares held
Tata Metaliks: 79 shares of Tata Steel for every 10 shares held
TRF: 17 shares of Tata Steel for every 10 shares held

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The mega-merger plan would require the approval of shareholders of all the seven Tata group companies as well as those of Tata Steel, regulatory bodies and stock exchanges. It is worth mentioning that under the leadership of N Chandrasekaran, the Tata group has been trying to consolidate its businesses that share common synergies. Earlier this year, the group announced the merger of its subsidiaries Tata Consumer and Tata Coffee. Some recent reports said that the Tatas are also planning to consolidate airline companies – Air Asia India and Vistara – under the Air India brand by 2024.

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