Bond Market News

Tata Steel will merge four listed and three unlisted subsidiaries for increased operational efficiencies and business synergies in order to focus on growth and save costs. Merger details are given below:

• Tata Steel Long Products (TSLP) shareholders will receive 67 shares of Tata Steel for every 10 shares held
• Tata Tinplate’s investors will get 33 shares of Tata Steel for every 10 shares held
• Tata Metaliks’ investors will receive 79 shares of Tata Steel for every 10 shares held
• TRF shareholders will receive 17 shares of Tata Steel for every 10 shares held
• The Indian Steel & Wire Products Ltd investors will get paid INR 426/share.
• Tata Steel Mining Ltd (TSML) and S&T Mining are wholly-owned subsidiaries and upon the merger their entire paid-up share capital will stand cancelled

Jatin Damania, Vice President, Kotak Securities said that he “expects INR 7.5-8bn ($92-98mn) of annual savings, equity dilution of 2.2% and potential EPS accretion of 1.5-2% and is likely to be completed by end of FY’24”. Tata Steel expects the proposed schemes will provide an opportunity for reduction of operational costs through transfer of intermediary products between companies, better order loads, synergies from sales and production planning across the businesses. Since 2019, Tata Steel has consolidated 116 associated companies, 72 subsidiaries, eliminated 20 associated and joint ventures and 24 companies under liquidation.

Tata Steel’s 5.45% 2028 traded lower 0.41 points to 92.93 to yield 6.72%.

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