On The Prowl: Tata Seeking Overseas Acquisition

Tata Group looking to buy leading European steelmaker.

New Delhi (AP) — India’s Tata Group is scouting for more overseas acquisitions, the company’s executive director said Friday as news reports spread that the conglomerate was looking to buy a leading European steelmaker.

“We are looking for opportunities in all areas where we are present,” said R. Gopalakrishnan, Executive Director of Tata Sons, the group’s holding company.

The Tata Group, with $22 billion in annual sales, has interests spanning everything from steel and automobiles to software services and hotels.

Shares of Tata Steel rose 1.2 percent on the Bombay Stock Exchange following Gopalakrishnan’s comments, which came amid reports that the company was in talks to acquire London-based Corus Group Plc.

Gopalakrishnan declined to comment on Corus, but Tata said in a statement Thursday that it was evaluating several global opportunities including a stake in the Anglo-Dutch steelmaker.

The Tata Group has been among the most aggressive Indian companies, many of which are trying to buy companies overseas to gain global visibility after thriving for decades in India’s protected market.

Earlier this week, it announced deals to buy the Ritz-Carlton Hotel in Boston and a 30 percent stake in South African tea maker Joekels.

The moves were part of a strategy to ratchet up ambitions to go global, Gopalakrishnan said.

“We are not short of resources. We have strong balance sheets,” Gopalakrishnan said.

In September, Tata said the group planned to invest $26 billion in expanding its operations.

An Indian newspaper on Friday said Tata Steel had lined up $6.5 billion in loans from three banks —London-based Standard Chartered, Dutch bank ABN Amro and Germany’s Deutsche Bank — to fund a possible bid for Corus.

It may also sell bonds to raise about $2 billion to later refinance some of the loans, the Business Standard report said.

As the news of a possible Tata takeover of Corus appeared Thursday, shares of the Anglo-Dutch steelmaker rose 16.3 percent up to $8.90 on the London Stock Exchange. Tata Steel shares closed 2.7 percent higher Thursday on the Bombay Stock Exchange at $11.77.

Corus has previously said it would make sense for the company to team up with a low-cost partner with assets in countries such as Brazil, India and Russia.

Consolidation of the steel industry has been a hot topic since Mittal Steel Co. NV won its battle to take over Arcelor SA earlier this year in a deal that will create a titan with control of close to 10 percent of global production. Some analysts argue that further consolidation will give the industry more pricing power and greater economies of scale.

Corus is the world’s ninth-largest steel producer by 2005 output and Tata is in 56th place, according to figures from the International Iron and Steel Institute.

A combined Tata-Corus entity would have an annual steel production of 25 million tons, making it the world’s fifth or sixth largest steel producer, according to a recent JPMorgan Chase & Co. report.

Last year, the company bought the 2 million-ton-a-year steelmaking operations of Singapore’s NatSteel Ltd. and another 40 percent stake in Thailand’s Millennium Steel PCL.