2007-01-31

Winner's curse?

Tata steel's stock price tumbled today. Winning the bid is not even the tip of the iceberg. Raising funds (which apparently they already have), servicing interest and loans, integration with the larger and culturally different firm, and improving shareholder value are far more difficult things. Yup, I will laud Tatas for coming out with the winning bid in a closely fought game. They surely seem to have gotten the game theory principles right.

Also, Tata's winning of Corus has nothing to do with our national pride, which issue unwarrantedly has been brought in into the corus deal. Our Ministers, particularly chidambaram and kamal nath, just need an excuse to blow their own trumpet.

PS: No, I have not become a cynic. Not yet.

3 comments:

Kiran said...

You will hear the words 'strategic rationale' over and over again - use and abuse as you indicated earlier :)
Either way the deal goes - you would hear the parties (Tatas or the so called, reputed financial analysts) sayin 'I told you so' - another phrase which is equally abused and probably never used in the right manner.

Anonymous said...

Great to see so many posts boss...is it the new year or the new job...:)...but great...keep it going...

Kapil said...

Here's my analysis

Biggest winners
UBS + Goldman Sachs: Had bought 11 percent of Corus before they pushed CSN into the bidding game.

(think 0.11*11 billion *(609-455)/455 dollars )

CSN: had 36 million of Corus Shares. Put in a bid of 475 pence per share (and did due deligence later, can you belive it, did it get ponied or believed Tata would outbid it anyway)

Corus and its other shareholders: Obvious Reasons


Ministers: Blowing their own trumpet. or What does India (or indian industry) gain through this publicity. Would investors be more willing to invest in India after this.

Dark Horse:
Tata Steel: Got screwed ??
yes but it had already decided to build up capacity. Think industry dynamics (consolidation, pricing power) Paid $700 per tonne of production . would have needed double that amount to build (unless what I read was wrong)

Verdict: There can be only one loser. (unless the industry consoldation wipes out smaller players)
But fingers crossed. Wot say?

2007-01-31

Winner's curse?

Tata steel's stock price tumbled today. Winning the bid is not even the tip of the iceberg. Raising funds (which apparently they already have), servicing interest and loans, integration with the larger and culturally different firm, and improving shareholder value are far more difficult things. Yup, I will laud Tatas for coming out with the winning bid in a closely fought game. They surely seem to have gotten the game theory principles right.

Also, Tata's winning of Corus has nothing to do with our national pride, which issue unwarrantedly has been brought in into the corus deal. Our Ministers, particularly chidambaram and kamal nath, just need an excuse to blow their own trumpet.

PS: No, I have not become a cynic. Not yet.

3 comments:

Kiran said...

You will hear the words 'strategic rationale' over and over again - use and abuse as you indicated earlier :)
Either way the deal goes - you would hear the parties (Tatas or the so called, reputed financial analysts) sayin 'I told you so' - another phrase which is equally abused and probably never used in the right manner.

Anonymous said...

Great to see so many posts boss...is it the new year or the new job...:)...but great...keep it going...

Kapil said...

Here's my analysis

Biggest winners
UBS + Goldman Sachs: Had bought 11 percent of Corus before they pushed CSN into the bidding game.

(think 0.11*11 billion *(609-455)/455 dollars )

CSN: had 36 million of Corus Shares. Put in a bid of 475 pence per share (and did due deligence later, can you belive it, did it get ponied or believed Tata would outbid it anyway)

Corus and its other shareholders: Obvious Reasons


Ministers: Blowing their own trumpet. or What does India (or indian industry) gain through this publicity. Would investors be more willing to invest in India after this.

Dark Horse:
Tata Steel: Got screwed ??
yes but it had already decided to build up capacity. Think industry dynamics (consolidation, pricing power) Paid $700 per tonne of production . would have needed double that amount to build (unless what I read was wrong)

Verdict: There can be only one loser. (unless the industry consoldation wipes out smaller players)
But fingers crossed. Wot say?