The biggest shareholders in Corus has said that it believed Tata Steel's 4.3 billion pound agreed takeover bid undervalues the Anglo-Dutch steel maker.
LONDON: The biggest shareholders in Corus has said that it believed Tata Steel's 4.3 billion pound agreed takeover bid undervalues the Anglo-Dutch steel maker.
Standard Life Investments, which owns 7.9 per cent of the company, noted that the acquisition of Corus brings many advantages to Tata, including elevating it into the top five of global steel producers and an as yet unquantified amount of synergy benefits.
"The offer from Tata does not attribute significant value to Corus shareholders from achieving what we understand to be the substantial savings available from the joining of the two businesses," it said.
Standard Life, however, declined to say if it would vote against the deal. But a spokesman for the investor said, "The 455p-a-share offer is lower than we would have expected the board of Corus to agree to and recommend."
Tata said the deal valued Corus at 7.9 times underlying Ebitda which is higher than Mittal's takeover of Arcelor earlier this year.
Herve Mangin, a fund manager at Axa, thinks the bid is too low and that Russian Severstal or Brazil's CSN could react.
"Corus is the only sizeable asset in Western Europe that can be bought. At the moment Tata's bid multiple is at least 10 pc below average recent deals in the sector," he said.
As part of the deal, Tata is putting 126 million pounds into the Steels Pension Fund and raising contributions to the main British Steel Pension Scheme from 10 per cent to 12 per cent until March 2009.
Meanwhile, unions representing more than 20,000 British steel workers are seeking urgent talks with Tata Steel in the wake of the agreed bid.
The five-union National Steel Coordinating Committee will be seeking guarantees over their members' jobs, pay and pensions as well as reassurances over the future of the UK's steel-making capacity.
The combined Tata and Corus would produce about 24 million tonnes a year, with the bulk coming from Corus, pushing it to number five in the global steel league.
Tata is already expanding its Jamshedpur operation from 5 million to 10 million tonnes and plans further developments in India.
Corus directors have recommended the deal and pledged their own holdings, including the chief executive Philippe Varin's 4m pound stake, to the offer.
Corus has agreed to pay a 43m pound break fee if the recommendation is withdrawn. The offer needs the backing of 50 per cent of shareholders and 75 per cent of the shares tendered.
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