Tata's Steep Price for Corus

The acquisition vaults the Indian company to No. 5 steelmaker in the world, but did it pay too much?

The fierce battle over Corus (CGA) was recently decided when Tata, the Indian steelmaker, beat CSN, the Brazilian rival, in a final face-off. The price was 608 pence per share, which translates to a total purchase price of $12 billion. Tata thus agreed to pay approximately nine times EBITDA (earning before interest, taxes, depreciation, and amortization) for what many industry observers regard as a troubled steel company. Why? What's next for the steel industry? And how will this deal affect the industry's ongoing consolidation efforts?

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