Tata Corus deal finally goes through

Indian steel major, Tata Steel has won approval from Anglo-Dutch steelmaker Corus Group for its US$8 billion takeover bid, creating the world's fifth-largest steel company.

The deal would mark the largest ever foreign takeover by any Indian company, and come as a consolidation in the fragmented steel sector after Mittal Steel's $31 billion acquisition of rival Arcelor this year.

Analysts did not rule out a counter bid for Corus amid growing pressure on other Russian and Asian producers to expand their global reach, but said the terms of the deal to be completed in January made it less likely.

Tata is currently just the 56th biggest steel producer globally but would be catapulted to being the fifth in the world steel-making rankings after the takeover of Corus. The takeover gives it access to Corus' technology as well as its production sites.

However it is not only Tata Steel that benefits from the deal as in order to survive, Corus needs to extend its global reach just as much as Tata does. A tie-up with Tata gives it, among other things, access to markets in India - one of the fastest-growing economies in the world - and to low-cost materials.

Ratan Tata, chairman of Tata Sons, will be at the helm of the merged entity called Tata Steel and Corus after the board of the Anglo-Dutch company accepted the Indian steel major's takeover bid.

The Indian firm agreed to refinance the majority of Corus's debt and to inject funds into its pension plan. It also agreed to a 1 percent break fee if the deal collapses due to a rival bid.

Both the companies refuted fears of job losses due to the takeover, and said that the deal was for the long-term and was about growth. There have been fears in Corus units in the UK that the deal may result in job losses.

"The biggest threat to jobs was if the deal had not taken place. This deal ensures that there will be no job losses. Tata has a long history of taking good care of people," Muthuraman added.