Corus gives more time to Tata Steel, CSN to revise bids
The battle for Corus is going to be a long-drawn one, with the Anglo-Dutch steel maker extending the time limit for its two suitors, Tata Steel and Brazil’s CSN, to outbid each other.
Corus has adjourned the much-awaited December 20 extraordinary general meeting, where the offers of the Indian and Brazilian steel makers were to be taken up. Corus took the decision to allow the bidders and shareholders to review their offers. This is the second time the crucial meet is being put off, the first one being the December 4 meet, which was extended by a fortnight to enable CSN make a formal offer.
The Corus move did not come as a surprise to those following the takeover story, as it was expected that the British company would give more time to the suitors to map out their financial strategies to match their revised price offerings.
No backing out
Sources tracking the development say that Tata Steel had no plans to back out of the race at this stage, but would deal with the situation sensibly. In other words, they feel that although the Tatas would revise its latest offer of 500 pence a share to match CSN’s 515 pence-a-share, the new bid would not be drastically higher than the last.
"Any price more than 535 pence to 550 pence a share would definitely put a serious squeeze on the debt servicing capacity of both the suitors and extend the time when the benefits of the merger actually begin to pour in," an analyst said.
Tata Steel, according to the sources, is likely to utilise the time to have discussions with Corus shareholders to market the strengths of the Tata Group vis-à-vis its rival, CSN, and the benefits that would accrue as an upshot of a Tata-Corus merger.
Tata Steel’s stock on the BSE dropped to Rs 435.60 at the end of the day on Wednesday from Rs 440.40 at the close of Tuesday, a drop of 1.08 per cent. Since October 5, when the company first officially announced that it was considering various opportunities, including Corus, the stock price of the company fell from Rs 537.85 to Rs. 435.60 on Wednesday, representing a drop of Rs 102.25.
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