There is now a real possibility of the December 4 meeting of Corus shareholders being postponed.
NEW DELHI/LONDON: With the bankers and advisors of Companhia Siderurgica Nacional (CSN) disclosing that they are already in possession of nearly 20% of Corus Group plc, there is now a real possibility of the December 4 meeting of Corus shareholders being postponed. The Anglo-Dutch company, for which the Tatas bid 455 pence a share, has opened its books to CSN, which has informally indicated a price of 475 pence a share.
Investment bankers UBS and Goldman Sachs on Friday disclosed their stock position in Corus as on November 20, the day CSN announced its interest, to the London Stock Exchange. While Goldman Sachs holds 4%, UBS has 7.36%, and Barclays 4.7%, with CSN itself indirectly owning 3.8%. This takes their collective shareholding close to 20%. With Standard Life rejecting the Tata bid as too low, it’s 7.5% holding will be enough to kill the Tata bid as it now stands.
As a higher bidder, CSN can ask for more time to due its due diligence and also seek a postponement of the shareholders’ meeting. The Tatas need approval from 50% of shareholders and 75% of the total voting shares to carry the day, and there is no possibility of that happening under the current shareholding structure and offer price.
Even though CSN’s advisors and bankers have over 15% in Corus, in many disclosures it has been made clear that their buying of shares has not been in the service of their client. This means they can take an independent stand if the Tata offer comes up higher. On the other hand, the Tatas are committed to funding a pension scheme in the UK, whose trustees have significant influence in Corus, including in their capacity as shareholders. It is not clear what quantum of equity is held by these trustees through various schemes in Corus.
The Tatas have promised to pump in £ 126 million to plug the deficit in one of the pension schemes.
The CSN top brass will, in the next few days, meet the pension trustees, who had supported the Tata bid and expressed doubts about the financial strength of the Brazilian company to fund the pension commitments.
Even though CSN had said that it would match the Tatas’ pension offer, it is yet to make a formal announcement to the pension trustees, whose vote will be crucial in deciding who finally succeeds in acquiring Corus. A report in the online edition of the UK-based Independent said that CSN was believed to have only held preliminary discussions with the trustees about its plan to bridge the pension deficit. It said the trustees could be concerned about CSN’s proposed offer, as the Brazilian company uses more debt than the bid from Tata Steel.
State of play
CSN, bankers & advisors now own 20% of Corus
Standard Life, unhappy with Tata bid, owns another 7.5%
Pension trustees will hold the balance in takeover fight
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