The Telegraph
Since 1st March, 1999
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Mr Tata, steel yourself
- How the rival-bid bad news was broken to Ratan

London, Nov. 18: Tata Steel “will not rush in tomorrow with a higher offer for Corus” to match yesterday’s counter bid by its Brazilian rival, Companhia Siderurgica Nacional (CSN), The Telegraph has learned after consulting key sources who spoke on condition of anonymity.

CSN is offering 475 pence per Corus share compared with Tata’s 455 pence, news of which forced the value of Corus shares to go up to 496 pence in free trading.

“We are not overtly worried,” was a comment from one of Tata advisers. “Over the next few days we will be evaluating the CSN offer.”

It is emphasised, however, that the management at Corus had talked over the past year to a number of possible partners, including CSN, before concluding its preferred choice was Tata. That still remains the case “although this is not to say that price is not relevant”.

It seems unlikely that Tata Steel will make a move one way or the other until CSN has made a formal offer — at the moment, its bid is tentative and conditional on further talks, due diligence checks and backing from the Corus board.

“It’s not easy to raise $10 billion as we have found out,” was a line from a Tata adviser.

Steel industry sources explained the timing of the CSN offer in this way: “The Corus-Tata merger is a strategic move and CSN does not want this to happen.”

Standard Life, one of the biggest institutional shareholders in Corus, has spoken of Tata’s offer undervaluing Corus but British media reports dismissed this as “posturing”.

Other steel industry experts, such as Lord Swraj Paul of Caparo, although acknowledging the Tata-Corus deal represented a “win win” situation for both sides, have said that ultimately “shareholders will go for the highest offer”.

When Rata Tata, chairman of the Tata Group, first announced his takeover plan at a press conference in London last month, he was repeatedly asked whether he would offer more money if there was a counter bid.

He skirted the question, saying he had made “a fair offer” and would not add anything else.

By coincidence, he happened yesterday to be in the editor’s office of The Times newspaper in London when news of the rival CSN offer came through and he was handed the agency snap: “CSN approaches Corus Group with 475 pence a share takeover proposal.”

Tata Steel had taken some journalists to its Jamshedpur plant and Tata’s presence at The Times was a natural follow-up, it was explained to The Telegraph.

The Times reported: “When he was given the news, Ratan Tata was silent and composed, seeming to read the same sentence over and over again.”

It went on: “His family’s £4-billion bid (£4.3 billion actually) for what was once British Steel — a deal that seemed to reverse economic history and recast perceptions about the balance of corporate power between Britain and India — was suddenly in jeopardy. ‘Interesting,’ Mr Tata said, finally.”

The paper said: “Investors last night believed that Mr Tata would return with a counter-offer.”

It added: “It was clear from Mr Tata’s response at The Times yesterday that Corus had not made contact with the Indian billionaire to inform him earlier of the rival offer — although, while in the offices of The Times, Mr Tata checked his mobile phone for missed calls and one of them had been Jim Leng, the chairman of Corus.

His phone had been buzzing repeatedly in his pocket.”

The Times said: “Suddenly, the comments Mr Tata had made just a few minutes earlier about Tata’s plans for integrating Corus into the family-owned firm, the prospects of selling British-made steel in Asia and the likelihood of job cuts as Corus pursues its rationalisation plans seemed redundant.”

The paper said: “The Tata Group had no contingency plan for a counter-offer, he said, because ‘Corus told us that this probably was not going to happen’. As details of CSN’s rival bid kept coming in, Mr Tata said, ‘So it is an all-cash offer’.”

According to The Times, “Mr Tata was composed, candid and good-humoured. When asked about his plans for a counter-offer he laughed and said: ‘We are not going to leave this office giving you any indication of what we are going to do.’ The CSN bid is backed by a syndicate of banks, which will finance the deal. They include Barclays, Goldman Sachs, BNP Paribas. Lazards is advising.”

The paper said the Tata-Corus deal was due to be put before shareholders on December 4.

“Mr Tata yesterday left the offices of The Times hoping to make his flight back to India last night. Before he left, though, he said that he needed to have a conversation with the Corus chairman.”

Reliable sources told The Telegraph that the reason why Corus could not take Ratan Tata into confidence was that it was legally obliged to inform the stock exchange first. It was pointed out that one man who has so far refrained from commenting is Lakshmi Mittal, who is still celebrating his successful acquisition of Arcelor earlier this summer.

“He wouldn’t have been too happy with the Tata-Corus deal,” was one revealing remark. “He will be following the CSN bid with entertainment. CSN are using some of the advisers that Mittal used. The people who seem the most shocked are the Indian media who thought the Tata-Corus deal was done.”

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