The article “Tata Steel: Did Expediency Trump Prudence?” by Moneylife examines the recent takeover of Tata Steel by ThyssenKrupp, a German steel company. The deal was announced in April 2018, with Tata Steel and ThyssenKrupp agreeing to merge their European steel operations to create a new company, ThyssenKrupp Tata Steel.
The article suggests that the takeover was driven by expediency rather than prudence. Tata Steel’s management was under pressure to improve the company’s financial performance, and the merger was seen as a way to achieve this goal. However, the article argues that the deal was rushed and did not provide adequate value to Tata Steel’s shareholders.
The article points out that Tata Steel’s European operations were struggling financially, with significant losses and high debt levels. The company’s management had been trying to turnaround the business, but with limited success. The merger with ThyssenKrupp was seen as a way to achieve economies of scale and reduce costs, but the article suggests that the deal may not have provided the expected benefits.
The article also highlights the lack of transparency and due diligence in the deal-making process. Tata Steel’s management was reportedly under pressure to complete the deal quickly, and the company’s board was not given sufficient time to properly evaluate the merger. The article suggests that this lack of transparency and due diligence may have resulted in a bad deal for Tata Steel’s shareholders.
The article concludes that the takeover of Tata Steel by ThyssenKrupp was driven by expediency rather than prudence. The deal may not have provided the expected benefits, and Tata Steel’s shareholders may have been left with a bad deal. The article suggests that the company’s management should have taken a more cautious approach and prioritized the interests of shareholders.
Overall, the article raises important questions about the decision-making process at Tata Steel and the lack of transparency and due diligence in the deal-making process. It highlights the need for companies to prioritize the interests of shareholders and to take a more cautious approach when making major business decisions.