The Tata Steel bid for Corus Group Plc received a jolt when the Corus board decided to allow Tata's Braizilian rival Companhia Siderurgica Nacional (CSN) more time to come up with a formal offer.
CSN was under pressure to come up with an offer by December 4, when shareholders were supposed to vote on the Tata offer.
The board of directors of Corus Group Plc has decided to postpone the extra-ordinary general meeting scheduled for December 4, 2006 to December 20, 2006. This meeting was scheduled to allow the shareholders to vote on the Tata Steel offer to take over Corus Group Plc at 455 pence per share.
The meeting is now being postponed to allow rival bidder CSN of Brazil to complete their due diligence procedure, the Corus board said in a communication to the London Stock Exchange. CSN has offered to make a bid at 475 pence per share but is yet to make a formal offer.
The board has said in a communication to the bourse on Monday: "The Board of Corus has decided that it is in the best interests of Corus shareholders to allow CSN some additional time to satisfy its pre-conditions and to determine whether it will put forward a formal offer."
The board has decided to move a resolution on December 4 at the EGM seeking a postponement of the meeting till December 20.
The board has also said in its communication that CSN had laid down three conditions for it making a formal offer. These are that CSN completes its due diligence, it manages to arrange the finance and the Corus board recommends the offer.
This will be interesting, as the Corus board cannot possibly be recommending both the offers from Tata Steel and CSN.
The board has also said that "At this time, the Panel on Takeovers and Mergers has not set a date by which CSN is required to clarify its intentions and either announce a formal offer for Corus or confirm its intention not to do so. In the event that the Panel subsequently sets such a deadline, an appropriate announcement will be made."
The board has also said that the advisers, Credit Suisse, JP Morgan Cazenove and HSBC have advised the board to recommend to the shareholders to vote for the adjournment.