TRF shares hit upper circuit as Tata Steel calls off merger

TRF shares hit 20 percent upper circuit on February 7 as Tata Steel called off the merger between the two, reversing the decision on unfavourable swap ratio.

At 11:15 am, TRF was locked in upper circuit at Rs 327.70 on the NSE.

“Since the announcement of the intended merger of TRF in September 2022, Tata Steel has been providing significant operational and financial support by way of placement of orders and infusion of funds,” Tata Steel said in an exchange filing.

“With the active support from Tata Steel, TRF has successfully navigated a highly challenging operating environment, witnessing a turnaround in its business performance.”

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In September 2022, Tata Steel had announced merger between seven of its group companies and itself, but the swap ratio for TRF was not a favourable one.

TRF shareholders were to get for 17 shares of Tata Steel for 10 shares of the company, which was a 53 percent discount at the time. As per the closing price of February 6, the discount had narrowed to 10 percent.

TRF shares have gained close to 97 percent over the past year. Its current market capitalisation is Rs 360 crore and Tata Steel holds 34 percent in the stock.

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What about the other mergers?

In September 2022, Tata Steel had approved the scheme of amalgamation between Tata Steel Long Products, The Tinplate Company of India, Tata Metaliks, TRF Limited, the Indian Steel & Wire Products, Tata Steel Mining and S&T Mining Company.

Tata Steel’s merger with Indian Steel & Wire Products is in advanced stages, while the TRF merger has been called off. The rest has been completed.

“The merger of five companies with a cumulative annual turnover of ~Rs 19,700 cr in FY23, in record time, presents a unique opportunity for consolidation of the downstream operations,” the company said.

The proposed scheme was to synergise operational integration and better facility utilisation; improve customer satisfaction and services; efficiency in working capital and cash flow management; faster execution of projects in pipeline; rationalisation of logistics costs.

At 11.15 am, Tata Steel was quoting at Rs 145.45 on the NSE, higher y 0.5 percent from previous close.

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