After Mittal, it could be Tata’s turn to feel the Russian heat
Tata Steel, which has offered to buyout Anglo-Dutch steelmaker Corus, could face competition from Russian firms including Severstal, whose counter bid had complicated Mittal Steel’s takeover of Arcelor earlier this year.
Two Russian steelmakers — Severstal and Novolipetsk — and Brazil’s CSN (Companhia SidergicaNacional SA) are said to be mulling over launching possible takeover bids for Corus and speculation could lead to further surge in Corus’ share price, market observers said.
Corus’ shares closed more than five per cent above the offer price of 455 pence per share proposed by Tata Steel yesterday at the London Stock Exchange on market expectations for a counter bid and a possible increase in the Tatas’ offer.
The shares were trading further up by 0.7 per cent at 485.25 pence on LSE on Wednesday.
However, some analysts argue that Tata Steel might not raise its bid and Corus would accept the offer, as the company is believed to have completed its search for a potential suitor over the past few months.
While Tatas’ offer of 455 pence per share leads to a market value of around USD8 billion for the London-based company, the Indian steel giant has pegged Corus’ enterprise value at USD10 billion.
Analysts said the final deal could be worth USD10 billion, taking into account Corus’ market value, outstanding debts and current cash position.
While the company’s current cash holdings could be used for part-payment of debts, the remaining debt would be taken over by Tata Steel, they added.
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