Tata steel merger ratio: How many Tata steel shares will shareholders of TSLP, Tinplate, Tata Metaliks and TRF will get post amalgamation?

Tata Group has decided to merge seven of its metal companies, listed and unlisted both, into Tata Steel. As per the scheme of arrangement, subsidiaries of the metal giant—Tata Steel Long Products Ltd, Tinplate Company of India Ltd, Tata Metaliks Ltd, TRF Ltd, Indian Steel & Wire Products Ltd, Tata Steel Mining Ltd, and S & T Mining Company Ltd — will be merged with the parent company Tata Steel.  

Steel major Tata Steel said the mega merge was mainly to derive business synergies and also to reduce and simplify the Tata Group`s steel business structure. The rejig in metal business of Tata Group comes after the announcement of the merger of Tata Coffee Ltd with Tata Consumer Products Ltd.  

How many shares of Tata Steel will shareholders of TSLP, Tinplate, Tata Metaliks and TRF will get?   

As per the merger plan, the four listed Tata Group metal companies —Tata steel long product, Tinplate Company of India Limited, Tata Metaliks Limited and TRF Limited — will be merged in ratio of 67:10, 33:10, 79:10 and 17:10 respectively.  

Meaning, Tata Steel will issue 67 fully paid shares of Re 1 each to shareholders of Tata Steel Long (except Tata Steel) for every 10 fully paid-up equity shares of Rs 10 each. Similarly, there will be 33 shares of Tata Steel issued for every 10 shares of Rs 10 each for shareholders of The Tinplate Company. TRF Ltd (listed) shareholders will get 17 shares of Tata Steel for every 10 shares of TRF Ltd held by them, while shareholders of Tata Metaliks will get 79 shares of Tata Steel against every 10 shares of the former.   

Why this merger was undertaken? 

As per Tata Steel, the resources of the merged entity can be pooled to unlock the opportunity for creating shareholder value in line with group level 5S strategy – simplification, synergy, scale, sustainability, and speed. 

According to brokerage ICICI Direct, the proposed scheme of amalgamation has been undertaken to realise better synergies of business of the entities involved in the scheme.  

"The proposed scheme would lead to operational integration and better facility utilisation, rationalisation of logistics costs, operationalised efficiency, simplified structure and management efficiency, etc. The merger will result in utilisation of each other’s facilities in a more efficient manner. There can be collaboration on the marketing and distribution network of entities," said the brokerage in a blog.