Tata Merger: Investors Of Smallcap Packaging Stock Will Get 8.65 Crore Equity Shares From Tata Steel; Why?

Shareholders of packaging company, Tinplate Company of India will get up to 8.65 crore equity shares from steelmaker Tata Steel as part of the mergers and acquisitions. The scheme of amalgamation between Tata Steel and Tinplate has been effective since January 15, while the record date to determine eligible shareholders was set on January 19. To these eligible shareholders, Tata Steel on Sunday received board of directors approval for 8.65 crore fully paid-up shares.

As per the regulatory filing on January 21, Tata Steel said that the board of directors approved the allotment of 8,64,92,993 fully paid-up equity shares of the company having a face value of Re 1 each to eligible shareholders of Tinplate as on the record date, Friday, January 19, 2024.

Tinplate stands amalgamated into and with Tata Steel and dissolved without being wound up with effect from January 15, 2024.

The amalgamation included a share exchange ratio of 33:10 -- which means -- 33 fully paid-up ordinary equity shares having a face value of Re 1 of Tata Steel to be allotted for every 10 fully paid-up equity shares of TCIL having a face value of Rs 10 each.

Tata Steel on Sunday said, "These equity shares so allotted shall rank pari-passu with the existing equity shares of the Company. These ordinary equity shares are proposed to be listed and traded on BSE Limited and the National Stock Exchange of India Limited."

Of the total 8.65 crore equity shares allotment, here are the key breakups:

- 17,019 fully paid-up equity shares of Tata Steel of face value Re 1/- each, allotted to 'TSL-TCIL Fractional Share Entitlement Trust' (managed by Axis Trustee Services Limited), towards fractional entitlements of eligible shareholders of TCIL with all additions or accretions thereto in trust, for the benefit of shareholders of TCIL, during the process of allotment of shares as per the Share Exchange Ratio of 33:10 as provided in the Scheme of Amalgamation.

- 18,60,864 fully paid-up equity shares of Tata Steel allotted to 'Tata Steel Limited - Unclaimed Securities - Suspense Escrow Demat Account TSL-TCIL Merger' maintained with Standard Chartered Bank, Fort Branch, Mumbai, representing in aggregate the equity shares of eligible shareholders of TCIL holding equity shares in physical form as on the Record Date and whose individual demat account details are yet to be made available to the Company as on the date of allotment.

This amalgamation is expected to enhance management efficiency, drive sharper strategic focus and improve agility across businesses based on the strong parental support from Tata Steel leadership. In line with Tata Steel's long-term strategy, the consolidation of the downstream operations will enable growth in value-added segments by leveraging Tata Steel's nationwide marketing and sales network. The amalgamations are also seen to drive synergies through raw material security, centralized procurement, optimization of inventories, reduced logistics costs, and better facility utilization.

Tata Steel's share price will be in focus this week. On Saturday, the stock price stood at Rs 133.90 apiece, broadly flat on BSE. Tata Steel's share price target is in the range of Rs 140-150 ahead.