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Battle for Corus nears deadline

Analysts expect a shoot-out between Tata Steel and Brazil's CSN, report Vijay Dutt and Lalatendu Mishra.

india Updated: Jan 21, 2007 23:05 IST

As the January 30 deadline fixed by Britain's Takeover Panel to bid for Anglo-Dutch steel maker Corus Group nears, excitement in the city of London is palpable.

Analysts expect a shoot-out between Tata Steel and Brazil's CSN, after the latter's last offer of 515 pence per share topped the earlier Tata counter bid. Both are expected to announce revised bids this week.

Corus spokespersons stuck to their "no comment" stand when HT asked to comment on the reports that another round of bidding war was on the corner. But other sources said that the earlier speculation in the city that Tatas would make a new knock-out offer of 600p, much higher than the speculated 550p a share early, around January 18, was misplaced and logically wrong.

It is now said that both are trying to put financing in place for higher bids and the Tatas are considering a logical enterprise value. "There has to be a rationale for increasing the bid amount", said a financial analyst.

According to mergers and acquisitions (M&A) experts, if a competitive bid still exists after the last date, the panel will determine a process to resolve the situation. Corus and the two bidders need to agree on this.

John Bennett, corporate head in solicitors firm Berwin Leighton Paisner LLP said, "Going by past examples, both the bidders will be given an opportunity to revise the offer once only on January 31. If neither bidder does so, the auction procedure will end and no new or revised offers can be announced."

He added, "If either of the bidders announce a revised offer on January 31, each bidder will be given another opportunity to announce a revised offer only once on February 1. Again, if either of them announces a revised offer on February 1, they will each be given one last chance to revise their offer on February 2. But if neither of them announce any revised offer, the auction procedure will come to an end at that time itself."

The Takeover Panel is expected to meet early next week to draw up rules for the expected last-minute showdown.

In London, it is being predicted that Tatas would make the first move, because Ratan Tata, said a source, had repeatedly said he would not enter into a bidding war. " Whatever bid comes from Tata would be final." CSN is said to be waiting to trump any last minute Tata offer.

Its chairman Benjamin Steinbruch is said to be determined to take Corus to achieve his dream of creating a multinational steel group and has negotiated loan facilities to fund its bid. The Tatas have their own plan for an increased bid by selling part of their stakes in Tata Consultancy Services.

But, sources close to Corus do not believe that there could be any understanding between Tata and CSN which was speculated earlier, although a merger between the two would create the world's fifth largest steel group.

According to investment bankers, though bidders are free to build a stake in Corus until January 30, these would not count for the purpose of any vote at the scheme meeting.

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First Published: Jan 21, 2007 22:43 IST