Tata Steel announced on February 7th that it would no longer pursue the merger with TRF, causing a significant surge in TRF shares by 20 percent, hitting the upper circuit. This decision marks a reversal from the initial plan due to an unfavorable swap ratio.
According to Tata Steel’s filing to the exchange, since the merger’s announcement in September 2022, Tata Steel had been extending substantial operational and financial support to TRF. This support included placing orders and injecting funds, which assisted TRF in navigating through challenging market conditions and achieving a turnaround in its business performance.
The merger plan, initially proposed in September 2022, aimed to consolidate seven of Tata Steel’s group companies, including TRF, into the parent company. However, TRF shareholders expressed concerns over the swap ratio, which was deemed unfavorable. Under the proposed ratio, TRF shareholders would receive 17 shares of Tata Steel for every 10 shares of TRF, representing a significant discount of 53 percent at the time of announcement.
TRF’s shares have seen a remarkable increase of close to 97 percent over the past year. With its current market capitalization standing at Rs 360 crore, Tata Steel maintains a significant 34 percent stake in TRF.
While Tata Steel proceeded with the merger of several other group companies, including Tata Steel Long Products, The Tinplate Company of Bharat, and Tata Metaliks, the merger with TRF has now been called off.
Tata Steel justified the merger plan as a strategic move to consolidate downstream operations and achieve synergies in operational integration, customer service enhancement, and cost optimization. However, with the TRF merger abandoned, Tata Steel continues to pursue its consolidation strategy with other entities.
At the time of the announcement, Tata Steel’s stock price experienced a slight increase of 0.5 percent, trading at Rs 145.45 on the NSE. Despite the setback with TRF, Tata Steel remains focused on its growth strategy and operational efficiencies across its group of companies.
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