Tata Steel - Would be merger be of any value?

Hi, today morning an announcement came that the Tata group will be merging all its Metal companies into Tata Steel. The companies being merged include :-

  • Tinplate : Shareholders will get 33 shares of Tata Steel for 10 shares of the company.

  • Tata Metaliks : Shareholders will get 79 shares of Tata Steel for 10 shares of the company.

  • Tata Steel long : Shareholders will get 67 shares of Tata Steel for 10 shares of the company.

  • TRF : Shareholders will get 17 shares of Tata Steel for 10 share of the company.

Have pasted the original announcement.
I don’t think the dates have been announced yet.

Would this merger bring any value unlocking in your opinion?
What would be the major positives & negatives?

The first reaction seems to be downside as most of the companies have opened gap down.

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Which company is best poised to take advantage of the merger ratio?

I beleive TATA METALIKS at 1st look

Others please opine

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Possibilities of merger arbitrage exist. If the share price of one of the smaller cos goes too low, and if you are willing to short 1 lot of Tata Steel and buy the equivalent (post merger) amount of the smaller co, then ideally it should work out. As with other risk arbitrage plays, the real risk is if the merger doesn’t go through. The reverse trade doesn’t work because you can’t trade FnO in any of the smaller cos, so there’s no way to short those.

What are long term cons and benefits

Hi all, I hope this thread is also related to tata steel. 4.5% is a nice dividend yield. considering the nature of the company. steel being in upcycle.

What I like about the company?

  • Dividend yield 4.5% is attractive.
  • Synergy with other valued added steel products is just amazing.
  • Raw materials 100% iron ore is sourced inhouse. only coal 50% requirements are imported. (from annual reports)
  • Being associated with the tata family.

What are my expectations?
I am not expecting the stock to be a huge multi-bagger. I expect the stock to be a nice cushion against inflation with the regular increasing dividend flow.

My Questions to fellow trackers of this company,

  1. Are my expectations good? your comments.
  2. As per annual reports I am to understand that all their iron ore requirements are satisfied in-house. in this case how long they will be able to dig up the iron ore? how much is left? how difficult is it to acquire new pits?
  3. since we are in a steel upcycle. how much in percentage it has effects on profits in the down cycle.

Any point you share will be helpful. thanks in advance!



Tata Steel will be the India’s first licensed manufacturer for Corten steel (Weathering steel). Corten steel eliminates the need for painting and forms a stable rust-like appearance after several years’ exposure to weather. It is widely used in construction of shipping containers and large structural work such as bridges.

There is a sureshot/concrete cost savings on iron ore royalty payments of about 500 crores (source: 5paisa), which is ~1.5% of the operating profit of TATASTEEL in FYe21 (not comparing to FYe22 because it seems to have been an exceptionally good year). There might be other synergies and cost savings but in my opinion but those are rather wishy-washy and may or may not pan out.

Disclosure: Was invested in TATASTEEL (~2% of my portfolio) and have gone for the merger arbitrage (by selling my TATASTEEL shares and buying TINPLATE/TATASTLLP).

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I am a long term investor, but these days short term losses have rather messed with appetite.

I request comments from more experienced investors on whether the decline is temporary?

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I see daily newspaper ads on the merger and asking shareholders attention
My point: I feel that cost saving will be the key and holding structure is cleared
For employees, transfers and Departmental issues will be solved.

Withdrawal of TRF’s merger with Tata Steel has triggered quiet a rally in TRF. I tend to agree with the upmove

My simple thesis on this name:

  1. Withdrawal of merger is a clear indication that the worst is behind - both financially and operationally
  2. A CHP (Coal Handling Plat) manufacturer, it is likely to be a beneficiary of growing thermal power need in the country. TRF is a vendor to BHEL who has been winning significant quantum of thermal power orders. Those should start to reflect in its vendor books as well.
  3. At 14x trailing PER, it is one of the cheapest stock among peer set.
  4. Finally, despite recent run-up, market cap is just INR 530cr. For a Tata Company, that should indicate signicant upside potential.

Happy to hear others’ views.