Corus, the Anglo-Dutch steel company, is set to open its books to its Brazilian rival CSN which on Friday crashed into its agreed 4 billion pounds bid from Tata Steel of India.
LONDON: Corus, the Anglo-Dutch steel company, is set to open its books to its Brazilian rival CSN
which on Friday crashed into its agreed 4 billion pounds bid from Tata Steel of India.
Quoting unnamed sources, a media report on Sunday claimed that advisers to Companhia Siderurgica Nacional (CSN) and Corus met on Saturday for the first time after news of the
approach broke.
The Brazilians could begin due diligence with a view to launching a formal offer within three weeks – ahead of an extraordinary general meeting on December 4 for Corus' shareholders to consider Tata's offer, The Sunday Telegraph said.
CSN's all-cash offer is worth 475p, against 455p cash from Tata, although it is still dependent upon CSN finalizing loans to fund the deal and receiving a recommendation fromthe Corus board.
If CSN does table a formal offer, Tata is not expected to go without putting up a fight.
Ratan Tata, Chairman of the Tata Group who was here on Friday when the CSN made its intent known to the London Stock Exchange has since returned to India. His only comment on
CSN's approach was "it is interesting."
The Indian company has historically avoided contested bid situations but analysts believe it remains committed to the deal. Shares in Corus closed up 22.5 on Friday at 495.5p.
On Friday, CSN said it was in the final stages of arranging debt finance, which will be underwritten by a syndicate of banks including Barclays, Goldman Sachs, BNP Paribas and others.
CSN will use cash reserves but it did not reveal how much; the company has some $2 billion of cash on its balance sheet.
It will match a proposal by Tata to put roughly $254 million into the Corus engineering steels pension fund and raise contributions to the main British Steel pension scheme from 10 per cent to 12 per cent until March 2009.
According to the media report a bid could also flush out other suitors.
Industry sources believe that Severstal, the Russian giant, earlier listed on the London Stock Exchange, might
try and muscle in on the action. It could offer Tata a partnership deal whereby it would provide additional finance to help fund a higher offer in exchange for some of Corus'assets.
Severstal had held talks with Arcelor earlier this year as part of the European steelmaker's attempt to fend off
an unsolicited bid from Mittal Steel. Mittal eventually emerged victorious.
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