The uneasy lull in the takeover battle between Tata Steel and CSN for Anglo-Dutch steelmaker Corus may end soon, with experts anticipating revised bids from the suitors by the middle of this month.
NEW DELHI/LONDON: The uneasy lull in the takeover battle between Tata Steel and CSN for Anglo-Dutch steelmaker Corus may end soon, with experts anticipating revised bids from the suitors by the middle of this month.
Legal experts as well as investment bankers expect the two bidders to sweeten their offers, if any, by that time so that the situation could be factored into the terms of the auction process mooted by the UK Takeover Panel.
The panel has set January 30 as the deadline for submitting revised bids, albeit with a rider that if the competitive situation continues "shortly before this date" auction process would be initiated to decide the winner.
If the revised bids are in by mid-Janaury, it would give the Takeover Panel time to factor in the development into the auction process that would be announced by the end of this month, Roy Montague-Jones, Partner and Joint India Head of UK-based international law firm Richards Butler said.
Jones said the panel could announce an auction a few days before January 30 if the final bids are placed on the table by that date.
On the panel's reference to a competitive situation "shortly before January 30," he said it probably means that this is the date by which matters should be resolved.
If Tata Steel and CSN have bids on the table, the panel will announce an auction procedure, which has generally lasted two-three days in the past, he said.
The exact terms and conditions of an auction are set by the Takeover Panel in discussion with all parties involved, Jones said.
However, it is rare that the competitive situation continues until the late stages of a bid, particularly when both bidders are offering cash for the deal, feel experts.
They anticipate one of the bidders to withdraw from the battle ahead of the auction exercise.
The chances of the process not reaching the level of auction are also high due to a possible clause in the auction terms that could force the bidders to add a significant premium over the previous offer.
If the panel rules for a hike of 20-25 pence a share in each revised bid during the auction, the bidders might decide against going for the auction, as experts believe CSN's 515 pence a share is already on the higher side.
In previous auction cases, the panel has ruled that any revised offer from a bidder should represent a certain increase in the price per share of the target company.
Jones said the auction for Corus deal could be similar to one used for acquisition of an online auction firm QXL Ricardo Plc in 2005, to resolve a takeover battle between Tiger Acquisition Corp backed by a US private equity fund, which was advised by Richards Butler, and Florissant, an acquisition vehicle backed by a Norwegian private equity fund.
In the QXL Ricardo case, the panel had announced the terms and conditions of the auction process three days before the start of the exercise. The panel ruled on March 4, 2005 that the bidders were permitted to announce a revised offer, other than in accordance with the auction procedure, by March 7, after which the auction process would start.
Under the auction, one bidder was given a day's time to submit a revised offer and the other bidder given time the following day to better it until one drops out.
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