There were a lot of apparent synergies between Tata Steel which was a low cost steel producer in fast developing region of the world and Corus which was a high value product manufacturer in the region of the world demanding value products.
Some of the prominent synergies that could arise from the deal were as follows:
1. Tata was one of the low cost steel producers in the world and had self sufficiency in raw material. Corus was fighting to keep its production costs under control and was on the lookout for sources of iron ore:
2. Tata had a strong retail and distribution network in India and SE Asia. This would give the European manufacturer an in-road into the emerging Asian markets. Hence, there would be a powerful combination of high quality development and low cost high growth markets.
3. There would be technology transfer and cross-fertilization of R&D capabilities between the two companies that specialized in different areas of the value chain.
4. There was a strong culture fit between the two organizations, both of which highly emphasized on continuous improvement and ethics. Tata steel’s Continuous Improvement Programme ‘Aspire’ with the core values: trusteeship, integrity, respect for individual, credibility and excellence. Corus’s Continuous Improvement Programme ‘The Corus Way’ with the core values:’code of ethics, integrity, creating value in steel, customer focus, selective growth and respect for our people.
