The Hindu Business Line : Corus takeover: Tata Steel, CSN set for fight to the finish

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Mumbai/London Jan 29 A Wild West-style bidding shoot-out between Tata Steel and Brazil's CSN for acquiring Anglo-Dutch steel maker Corus seems to be increasingly gaining credence.

Technically, Tata Steel has a few hours left to trump CSN's last bid of 515 pence a share.

Sources said that the Indian steel maker is unlikely to submit a fresh bid before the closed-door auction begins in London at 10 p.m. IST on Tuesday.

The Tatas may not like a repeat of December 10, when CSN jumped their revised bid of 500 pence a share. On that day, Tata Steel, which had been waiting for CSN to come out with a formal bid, decided to move in and seal the deal by marking up its original offer of 455 pence by 10 per cent to 500 pence.

At this price, Tata Steel would have had to pay about $9.2 billion for Corus (£4.7 billion) against $8.1 billion linked to its first offer of 455 pence.

Hours later, CSN came up with the 515 pence offer, three per cent more than Tata Steel's revised offer.

"The Tatas will avoid a showdown again. They are preparing for a final exchange of fire with CSN in a nine-round auction," the sources said.

Officially there is no word from the Tatas even as the Brazilian rival is openly confident of outbidding them.

Sources tracking the deal said that Tata Steel may go up to 600 pence (roughly $11 billion) for Corus, to make it the fifth largest steel producer in the world.

Besides, the Tatas would benefit from the finished mills of Corus in Europe, supplying steel to automakers such as Ford Motor and Volvo AB.

With both companies refusing to give in, the UK Takeover Panel intervened last week to end the stalemate through an auction.

Nine rounds

With nine rounds of bidding, the auction process is expected to continue till the morning hours of Wednesday (8.30 a.m. IST), when the results of the auction will be made public.

The Takeover Panel is reported to have met representatives of both the companies.

Corus employs some 23,000 people in the UK and has a pension scheme with a liability of £13 billion.

But an industry watcher following the developments said that the pension liability was unlikely to be the differentiator, with both bidders having factoring it in. In fact, the Tatas have offered to pick up the tab.

At the time of making the revised bid, Mr Ratan Tata, Chairman of Tata Steel, had said: "We remain convinced of the compelling strategic rationale of this partnership and the revised terms deliver substantial additional value to Corus shareholders."

The Tata Steel scrip closed at Rs 519.30 on the BSE on Monday, up by Rs 10.05 (1.97 per cent) from the previous close of Rs 509.25.

More Stories on : Mergers & Acquisitions | Tata Steel Ltd

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