The Telegraph
Since 1st March, 1999
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Hint of cracks in Corus delay

London, Dec. 12: Corus, the Anglo-Dutch group at the centre of an acquisition battle between the Tatas and Brazil’s CSN, will ask its shareholders to postpone a meeting scheduled for December 20.

In a statement issued tonight, the Corus board said a new date would be fixed later.

The postponement move suggests that differences are emerging within Corus on which deal would be better in the long term for the group.

Shareholders of Corus were also advised by market analysts to sit back and “enjoy” the bidding war between Tata Steel and CSN.

This means another bid by Tata cannot be ruled although its advisers would only tell The Telegraph that the Indian company was “considering” its position.

It is now up to Ratan Tata, the chairman of the Tata group who began secret negotiations with Corus management in October last year, to decide what his next move, if any, should be.

Yesterday, after CSN’s 515p a share offer, which trumped Tata’s 500p a share bid of the night before, Corus shares went up 5 per cent or 27.25 to 527.25p, which is 80 per cent higher than this time last year.

And as the war between the Indian and Brazilian steel companies moves towards the end game, analysts were advising shareholders to hold their nerve and not sell just yet.

Jeremy Batstone, equity analyst at Charles Stanley, was today quoted by the Scotsman as saying: “The ball is firmly back in Tata’s court. We believe Corus to be fully valued, but retain our ‘hold’ recommendation as investors await further developments.”

There was an interesting suggestion from The Daily Telegraph which said: “Corus has extracted a devilishly high price from Benjamin Steinbruch, the CSN chairman whose nickname is Demoni (the Devil). But with analysts confident CSN can pay up to 535p a share, compared with its offer of 515p a share, it should be forced to up its bid again. Tata, should return with a higher offer to make sure CSN pays the fullest price.”

Another Telegraph commentator acknowledged that Steinbruch “is in pole position to buy Corus with a £4.9-billion bid which would propel CSN from 45th to fifth in the world league of steel companies, producing about 24m tonnes a year”.

In London, Market Watch pointed out that “New York-listed CSN shares slipped 1.3 per cent, while Tata’s stock fell 6 per cent in Mumbai”.

It added that “the CSN offer is subject to shareholder approval and regulatory clearance and also depends on the Tata deal falling through”.

Lead shareholder Standard Life Investments, which holds nearly 8 per cent of Corus and which had expressed unhappiness with Tata’s initially 455p offer, also adopted a wait-and-see posture.

“We are clearly in a competitive situation,” commented David Cumming, head of UK equities for Standard Life Investments, in a statement. “We will await developments.”

Luc Pez, an analyst at Societe Generale, wondered whether CSN has landed a knockout blow. “A bidding war could now prove short lived as Tata Steel might be forced to step down. However, we acknowledge the bidding process could well become irrational,” Pez said in a note to clients.

Corus has agreed not to solicit any other approaches, said analysts. Tata may receive a break-up fee equivalent to 1 per cent of its offer, or some £47 million. CSN also is entitled to a 1 per cent break-up fee if Tata or another party trumps its offer.

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