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The Board of Directors of Tata Steel has approved a mega-merger/amalgamation of all metal companies of the Tata Group into Tata Steel.
The company informed the stock exchanges about a scheme of amalgamation of Tata Steel Long Products Limited, The Tinplate Company of India Limited, Tata Metaliks Limited, TRF Limited, The Indian Steel & Wire Products Limited, Tata Steel Mining Limited, and S&T Mining Company Limited, all of them amalgamated into Tata Steel.
This was approved by the parent company's Board.
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All these companies, except TRF, are either majority owned or wholly owned by Tata Steel. Tata Steel has a 34.11% stake in TRF Ltd. The proposed swap ratio for the 4 listed entities in this amalgamation is:-
- For every 10 shares of Tata Steel Long Products, 67 shares of Tata Steel.
- For every 10 shares of The Tinplate Company of India, 33 shares of Tata Steel.
- For every 10 shares of Tata Metaliks, 79 shares of Tata Steel.
- For every 10 shares of TRF, 17 shares of Tata Steel.
These 7 schemes are each subject to receipt of approval from five entities: (1) Majority shareholders of all relevant companies, (2) Competent Authorities, (3) SEBI, (4) Stock Exchanges & (5) such other approvals, permissions, and sanctions of regulatory and other statutory or governmental authorities / quasi-judicial authorities, as may be necessary as per applicable laws.
This is part of the Tata Group's plan to reduce the number of listed entities from 29 to around 15 in the coming months to focus on investing in a few big entities to improve competitiveness.
According to Koushik Chatterjee, CFO of Tata Steel, this amalgamation would allow the steel giant to simplify management and improve the focus on business.
The stock of Tata Steel has responded negatively ever since the amalgamation scheme was announced. The stock breached Rs 100 today as it hit a low of Rs 98 per share today. It currently trades around Rs 100 per share, down 3.7%.
Article by Aman Agarwal.
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