Tata Steel shines bright

Tata Steel is very much in the news today; the stock price rose almost 4% in the opening bell session to hit an intraday high at Rs.107.90. Its 52-week high is at Rs.114.

The stock price rose after the company said that its Board approved the scheme of amalgamation between seven of its group companies into itself. This makes great economic and business sense for Tata Steel but the market seems miffed with the four companies swap ratio, especially TRF as they feel that they are not getting the right value.

The seven companies which will now be merged are – Tata Steel Long, Tinplate Company, Tata Metaliks, TRF Ltd, Indian Steel & Wire Products, Tata Steel Mining and S&T Mining.

As per the scheme, the ratios of merger are as follows:

Tata Steel Long – 67 shares (Re.1/FV) of Tata Steel for every 10 shares held (Rs.10/FV).

Tinplate – 33 shares of Tata Steel for every 10 shares held

Tata Metaliks – 79 shares of Tata Steel for every 10 shares held

TRF – 17 shares of Tata Steel for every 10 shares held

Tata Steel stocks but those of the entities being merged fell – Tata Steel Long fell over 9%, Tata Metaliks fell more than 3/5%, Tinplate fell 6.5% and TRF opened down 5% at Rs.355.65, hitting the LC of the day.