Corus’ Brazilian rival gate-crashes Tata party
Corus, the Anglo-Dutch steel company, is set to open its books to its Brazilian rival CSN which on Friday gate-crashed into its agreed 4 billion pound bid from Tata Steel of India.
Quoting unnamed sources, a media report on Sunday claimed that advisers to Companhia Siderurgica Nacional (CSN) and Corus met on Saturday for the first time after news of the approach broke.
The Brazilians could begin due diligence quickly with a view to launching a formal offer within three weeks — ahead of an extraordinary general meeting on December 4 for Corus’ shareholders to consider Tata’s offer, the Sunday Telegraph said.
CSN’s all-cash offer is worth 475P, against 455P cash from Tata, although it is still dependent upon CSN finalising loans to fund the deal and receiving a recommendation from the Corus board. If CSN does table a formal offer, Tata is not expected to go without putting up a fight.
Ratan Tata, chairman of the Tata group who was here on Friday when the CSN made its intent known to the London Stock Exchange has since returned to India. His only comment on CSN’s approach was “it is interesting.”
The Indian company has historically avoided contested bid situations but analysts believe it remains very committed to the deal.
On Friday, CSN said it was in the final stages of arranging debt finance, which will be underwritten by a syndicate of banks, including Barclays, Goldman Sachs, BNP Paribas and others.
CSN will also use cash reserves but it did not reveal how much; the company has some 2 billion dollar (1.05 billion pound) of cash on its balance sheet.
It will also match a proposal by Tata to put 126 million pound into the Corus engineering steels pension fund and raise contributions to the main British steel pension scheme from 10-12% until March 2009.
According to the media report a bid could also flushout other suitors. Industry sources believe that Severstal, the Russian giant which earlier listed on the London Stock Exchange, might try and muscle in on the action.
It could offer Tata a partnership deal whereby it would provide additional finance to help fund a higher offer in exchange for some of Corus’ assets.
Severstal had held talks with Arcelor earlier this year as part of the European steelmaker’s attempt to fend off an unsolicited bid from Mittal Steel. Mittal eventually emerged victorious.
—PTI
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