Brazilian steelmaker Companhia Siderurgica Nacional announced on Friday that it had made a takeover approach to British peer Corus.
Updated at midnight
LONDON: In a dramatic development that could trigger a major global takeover battle, Brazilian steelmaker CSN on Friday made a 5 billion pound counter offer for Anglo-Dutch company Corus, bettering the 4.23 billion pound bid made by the Tatas, which, caught unaware, could explore legal options.
In a statement to the London Stock Exchange, Companhia Siderurgica Nacional, one of the largest steelmakers in Latin America, said it proposed to offer 475 pence a share, trumping Tata's 455 pence per share offer.
Benjamin Steinbruch, CSN Chairman and Chief Executive said, "A combination of CSN and Corus would create a global powerhouse with market-leading positions and exceptional distribution networks across both developed and emerging markets."
Caught by surprise at the development, a Tata spokesperson said in New Delhi that "we have no comments to offer at this juncture."
Sources at the Indian conglomerate, however, said that they could explore the legal option about the takeover code and did not rule out raising bids.
The issue is likely to be grappled with at the
Extraordinary General Meeting of Corus on December 4 when the Tata offer was scheduled to come up.
The news of CSN's bid for Corus immediately saw a 24 pence per share jump to 297 pence per share of the Anglo Dutch company in mid-afternoon LSE trading.
"With its vertically integrated structure and industry leading margins, the enlarged CSN-Corus entity would become a leader in the global steel industry, fully self-sufficient in iron ore and ideally positioned to take advantage of the ongoing consolidation," Steinbruch said.
The Brazilian group, which employs 8000 people in Brazil, said it had recently built up a stake of about 3.8 per cent in Corus, including Corus' debt.
"The combination of CSN and Corus would create one of the top five global steel groups with 24 million tonnes of annual steel production and by 2010, approximately 50 million tones of annual iron ore production," he said.
It said the deal would enable Corus to secure supply of high quality, low cost iron ore from CSN's Casa de Pedra mine, one of the largest captive mines in the world.
The deal would also provide Corus with access to increased quantities of low-cost semi-finished steel for further processing across the Anglo-Dutch Group's downstream facilities in Europe.
CSN, which has overseas operations in the US and Portugal, said it had lined up financing for the proposed deal from Barclays Bank, Goldman Sachs and BNP Paribas.
The informal approach comes a month after Corus backed a takeover offer from Tata Steel that had valued the company at 4.3 billion pounds.
The banks include Barclays Bank PLC, Goldman Sachs Credit Partners and BNP Paribas and their designated affiliates.
CSN believes there is compelling strategic and industrial logic for a combination with Corus as it would create a top global steel group with 24 million tonnes of annual steel production and by 2010, approximately 50 million tonnes of annual iron ore production.
The Brazilian company has annual production capacity of 5.6 million tonnes of crude steel.
The acquisition would allow Corus greater access to fast growing markets as well as providing opportunities for cross-selling the enlarged portfolio of products, the statement said.
The acquisition would enable Corus to secure supply of "high quality, low cost" iron ore from CSN's Casa de Pedra mine, which is one of the largest captive mines in the world.
The acquisition would also provide Corus with access to increasing quantities of low cost, semi-finished steel for further processing across its downstream facilities in Europe, CSN said.
"A combination of CSN and Corus would create a global powerhouse... with its vertically integrated structure and industry leading margins, the enlarged group would become a leader in the global steel industry, fully self-sufficient in iron ore and ideally positioned to take advantage of ongoing consolidation," CSN Chairman CEO Benjamin Steinbruch said.
Goldman Sachs International is the financial advisor to CSN, which is listed on the Sao Paolo and New York Stock Exchanges with a market capitalisation of about $8.6 billion.
Corus acknowledged a counter offer for its acquisition by CSN but reserved its comments.
"Corus notes the recent announcement by CSN and confirms that it has this afternoon received an approach by CSN," a Corus spokesperson said.
She said, "A further announcement by Corus will be made in due course."
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