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Corus takeover: Tata mulls next move

Brazilian steelmaker CSN has announced a tentative bid for British peer Corus, setting the stage for a takeover battle with Tata.

india Updated: Nov 18, 2006 16:25 IST

Tata Steel was mulling its next move on Saturday after Brazilian steelmaker Companhia Siderurgica Nacional (CSN) announced a tentative bid for British peer Corus, setting the stage for a takeover battle with the Indian steel major.

On Friday, Companhia Siderurgica Nacional (CSN) made an informal offer for Corus, valuing Britain's top steelmaker at £5.3 billion ($10.0 billion) including debt, trumping last month's agreed bid from Tata Steel of £5.1 billion pounds (9.65 billion dollars).

The CSN offer, which is subject to due diligence and finalisation of funding, means steelmakers from two of the world's emerging economic superpowers - India and Brazil - could slug it out for control of Corus as they seek to gain ground on world's number one steelmaker Arcelor Mittal.

Tata, whose bid was slated to go before a Corus extraordinary shareholder general meeting on December 4, declined to comment on the counter-offer.

"We're not saying anything right now. We'll see," said a senior official at Tata Steel.

But a newspaper , quoting unnamed financial sources, said Tata Steel was set to boost its offer for Corus next week.

"Tata Steel had already factored in a possible counter-bid," said an investment banker.

If successful, the bid by Tata Steel, part of the formidable Tata Group, would be India's largest foreign takeover, dwarfing all previous ones.

Corus's acceptance of the Tata Steel offer had been hailed in India as a definitive sign of Indian companies becoming major acquisition players on the global stage.

The Corus transaction had been expected to be completed by mid-January.

After the CSN bid, Corus said it would make an announcement "in due course."

Shares of Corus rocketed 4.76 per cent to 495.50 pence on Friday as investors scented a bidding war.

The fragmented steel industry has been under pressure to consolidate after the top two companies- Arcelor and Mittal Steel, merged earlier this year.

CSN, Brazil's third-biggest steelmaker which had attempted to merge with Corus back in 2002, approached Corus with a 475 pence per share cash takeover proposal compared with a 455 pence per share offer from Tata Steel.

CSN said the combination of CSN and Corus would create a top five global steel group with 24 million tons of annual steel production.

The deal would also give Corus access to more low cost semi-finished steel for further processing at its downstream plants in Europe and effect significant savings.

The acquisition of Corus would boost Tata Steel's capacity to 23.5 million tonne a year from the present five million tonnes and catapult Tata Steel from the mid-50th spot globally among steel producers into the top half dozen.

Corus, spawned by the 1999 merger of Dutch firm Hoogovens and British Steel, is Europe's second-largest steel maker and the world's ninth-largest, producing around 18 million tonnes per year.