In September 2022, Tata Steel had announced plans to merge seven of its group companies to streamline operations. One of these proposed mergers was between Tata Steel and TRF Limited. However, the steel major has now decided to call off the TRF merger. As a result, shares of TRF hit the upper circuit limit on stock exchanges. 

Let’s take a closer look at what happened:

  • In September, Tata Steel’s board had approved merging Tata Steel Long Products, The Tinplate Company of India, Tata Metaliks, TRF Limited, Indian Steel & Wire Products, Tata Steel Mining and S&T Mining Company with itself. 
  • The merger was aimed at synergizing operations, improving customer service, optimizing costs and bringing more efficiency across businesses. 
  • However, the swap ratio for the Tata Steel-TRF merger was considered unfavorable for TRF shareholders. They were to get 17 shares of Tata Steel for every 10 shares of TRF. 
  • This represented a discount of around 53% based on the share prices at that time. Over the past few months, the discount has narrowed to just 10%.
  • Now, Tata Steel has decided to call off the TRF merger specifically, reversing its earlier decision. The company said it has been supporting TRF’s operations and finances in the interim period. 
  • With Tata Steel’s help, TRF has managed to turn its business around and navigate market challenges successfully. So the merger is no longer required.
  • The announcement had an immediate impact on TRF’s stock price. On February 7th, shares of TRF jumped to hit the upper circuit limit of 20% at Rs 327.70 apiece on the NSE.
  • Tata Steel confirmed that the mergers of five other group companies, including Indian Steel & Wire Products, have been completed successfully.
  • Only the TRF merger proposal now stands cancelled after reevaluating the swap ratio terms between the two companies.

In conclusion, Tata Steel’s decision to call off the TRF merger enabled TRF shares to rally strongly. The steel major’s support has helped TRF improve its performance independently. This allows TRF shareholders to benefit from potential future upside in the company. The streamlining of other Tata Steel group businesses via mergers continues as planned.

Tata Steel called off its proposed merger with TRF Limited. As a result, TRF shares hit their upper circuit limit of 20% on the stock exchange as investor sentiment boosted the stock price higher. 

Tata Steel’s board had approved merging seven group firms in September. However, it reversed the decision for TRF alone due to an unfavourable swap ratio. TRF shares jumped as the merger threat receded.

TRF shares rallied sharply after Tata Steel announced calling off their proposed merger. The steel major’s support has helped TRF perform well independently instead of merging as per the initial plans disclosed last year.