Abstract

The case discusses in detail the various drivers that led to the merger of British Steel and Hoogovens to form a new company, Corus. It provides relevant information about the European steel industry in general and the UK steel industry in particular during the period, both before and after the merger. Corus was an attempt to revive the ailing British Steel which had incurred a net loss of £81 million in the year ended 31 March 1999. Analysts pointed out that the high valuation of the British pound and stagnation in demand for steel was gradually undermining the competitiveness of British Steel in the European market. The larger merged company was expected to meet the challenges of the increasing bargaining power of customers and the downward movement of steel prices. The Dutch partner Hoogovens sought to gain critical mass in the global metals market through synergies with its UK partner. But Corus failed to live upto market expectations. Just three years after the merger, in 2003, Corus's stock market valuation had dropped to $230 million from $6 billion in 1999. Various reasons were identified for the failure, chief among them being the cultural mismatch between the merged entities and the lack of HR involvement when integrating the two entities. Large scale labour unrest due to the downsizing and rationalization of various operations seriously impacted the normal functioning of the new organization.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Merger of British Steel and Royal Dutch Hoogovens
• Anglo-Saxon management style
• Cross-border mergers
• Cultural Mismatch.

Keywords

British Steel, Dutch Royal Hoogovens, Corus Group Plc., The European Steel Industry, Cross Country Mergers, Cultural Mismatch, Anglo-Saxon Style of Management, Trade Unions, Dutch Trade Union Federation, The UK Steel Industry, Synergies, Global Steel Supply-Demand, World Steel Prices, HR Issues in Cross-Border Mergers and Synergies From Mergers