UK Takeover Panel may auction Corus
The battle for Anglo-Dutch steelmaker Corus looked set to take an unexpected twist with reports that Britain’s Takeover Panel was mulling a rare intervention by arranging an auction between the two bidders—Tata Steel and CSN—to avoid a battle.
Tata Steel bid 4.7 billion pounds (at 500 pence a share) for Corus on December 11, but within hours, CSN offered a higher 4.9 billion pounds (at 515 pence a share).
“We have a situation where there are two buyers and you need some mechanism to decide the winner,” Anthony Pullinger, deputy director-general of the Takeover Panel, was quoted as saying in Financial News magazine. Both bidders made their offers through an arrangement that requires court approval, the report said. The panel has made such an intervention only three times in its 38-year existence.
A Tata Steel spokesperson said the company did not wish to comment on the Takeover Panel’s possible move. The report quoted a Corus spokesperson as saying, “All parties are continuing their dialogue with the panel, as they have done throughout the process”.
The magazine cited unidentified sources as saying that the panel would consult the three parties before deciding on an auction date. The panel could decide on a sealed process where bidders’ offers are final, or a standard auction held over a period of days, it said.
The Takeover Panel is mandated by law to intervene in cases where it feels larger shareholder concerns need to be addressed. The panel also intervenes if its feels there exists a situation where unfair trading in shares of a company may take place or if it feels there could be unethical price manoeuvring. According to experts, the takeover panel first recommends that the company concerned invite bids as per its advice. If the concerned company disagrees then the panel, under powers conferred upon it, directs the company to do so, which is legally binding.
WHO WILL HAVE THE LAST LAUGH?
• Takeover Panel’s possible intervention would be the third time in its 38-year history
• The committee may decide on a sealed process where bidders’ offers are final, or through a standard auction
• Tata Steel had offered 500 pence per share whereas Corus had offered 515 pence per share
The terms of CSN’s pre-conditional offer remain valid until July 20, 2007, resulting in a long period of uncertainty for Corus and its shareholders, the report said.
Experts said the company inviting bids had the right to reject any bids. In which case, the company could re-invite the bids without the advice of the panel only after a period of six months.
Schemes of arrangement, which require the approval of a majority of shareholders with at least 75% shares, are attractive because the buyer does not need to pay the applicable 0.5% stamp duty tax.
Corus was formed in 1999 following a merger between the ailing British Steel and Holland’s Hoogovens. Corus returned to the black under CEO Philippe Varin, who headed the company for three years.
Corus’ pension funds have total liabilities of £13bn.
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