RECOMMENDED ACQUISITION of Corus Group plc by Tata Steel UK Limited, a wholly-owned indirect subsidiary of Tata Steel Limited

20 Oct 2006

Summary

• The boards of Tata Steel and Corus are pleased to announce their agreement on the terms of the recommended acquisition of the entire issued and to be issued share capital of Corus at a price of 455 pence in cash for each Corus Share, valuing Corus at £4.3 billion.

• Tata Steel is India’s largest private sector steel company with 2005/06 revenues of US$5.0 billion and crude steel production of 5.3 million tonnes across India and South-East Asia. It is a vertically integrated manufacturer and is one of the world’s most profitable and value creating steel companies. Tata Sons, Tata Steel and other Tata companies had combined revenues in 2005/06 of approximately US$22 billion. Tata Sons’ current investments are valued at approximately US$50 billion.

• Corus is Europe's second largest steel producer with revenues in 2005 of £9.2 billion and crude steel production of 18.2 million tonnes, primarily in the UK and the Netherlands.

• The combination is strategically compelling, creating a vertically integrated global steel group:

  -  fifth largest global steel producer with pro forma crude steel production of 23.5 million tonnes in 2005

  -  high quality, low cost, attractive growth platform in Asia combined with a leading European steel player

  - high value-added product mix and strong market positions in automotive, construction and packaging

  - a more resilient business model and a strong platform for further growth

  - a strong and committed combined management team

  - a common business culture and shared values

• The price of 455 pence per Corus Share represents:

  1. on an enterprise value basis, a multiple of approximately 7.9 times underlying EBITDA from continuing operations for the twelve months to 1 July 2006 (excluding, inter alia, the non-recurring pension credit of £96 million) and a multiple of approximately 5.4 times underlying EBITDA from continuing operations for the year ended 31 December 2005; and

  2. a premium of approximately 26.2 per cent to the average closing mid-market price of 360.5 pence per Corus Share for the twelve months ended 4 October 2006, being the last business day prior to the announcement by Tata Steel that it was evaluating various opportunities including Corus.

• Tata Steel has held constructive and satisfactory discussions with Corus’ two main UK pension schemes and has offered:

  1. to fund upfront the IAS 19 deficit on the Corus Engineering Steels Pension Scheme by paying £126 million into the scheme; and

  2. to increase the contribution rate on the British Steel Pension Scheme from 10 per cent to 12 per cent until 31 March 2009.

• The Acquisition will be made by Tata Steel UK, a wholly-owned indirect subsidiary of Tata Steel, and will be implemented by way of a scheme of arrangement under section 425 of the Companies Act 1985.

• The Corus Directors, who have been so advised by Credit Suisse (as lead financial adviser), JPMorgan Cazenove and HSBC (as independent financial adviser for the purposes of Rule 3 of the City Code), consider the terms of the Acquisition to be fair and reasonable, so far as Corus Shareholders are concerned. Accordingly, the Corus Directors intend to unanimously recommend that Corus Shareholders vote in favour of the Scheme as they have undertaken to do in respect of their own beneficial holdings of Corus Shares, representing approximately 0.1 per cent of the existing share capital of Corus. In providing their advice, Credit Suisse, JPMorgan Cazenove and HSBC have taken into account the commercial assessments of the Corus Directors.

Commenting on today’s announcement, Ratan Tata, Chairman of Tata Steel, said:

"This proposed acquisition represents a defining moment for Tata Steel and is entirely consistent with our strategy of growth through international expansion.

"Corus and Tata Steel are companies with long, proud histories. We have compatible cultures of commitment to stakeholders and complementary strengths in technology, efficiency, product mix and geographical spread.

"Together we will be even better equipped to remain at the leading edge of the fast changing steel industry."

Jim Leng, Chairman of Corus, said:

"This offer from Tata Steel reflects the substantial value created for Corus shareholders since the placing and open offer and launch of our "Restoring Success"programme in 2003.

In the middle of last year, my board agreed a strategic way forward for Corus to seek access to low cost production and high growth markets. Consistent with this, the Company held talks with a number of parties from Brazil, Russia and India. This transaction represents the culmination of these talks.

This combination with Tata, for Corus shareholders and employees alike, represents the right partner at the right time at the right price and on the right terms. This creates a well balanced company, strategically well placed to compete in an increasingly competitive global environment."

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