The Telegraph
Since 1st March, 1999
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Deadline set to decide Corus fate

Calcutta, Dec. 19: The Takeover Panel, the regulator for mergers and takeovers in the UK, has set a January 30 deadline to decide the fate of Corus Group Plc.

The panel today intervened in the takeover tussle between Tata Steel and Brazil’s CSN to pull a curtain on a seemingly long drawn process.

Following discussions with the parties, the panel executive ruled that CSN and Tata Steel have to announce revised offers for Corus within January 30, 2007.

If the stalemate continues till that time, the panel will initiate an auction procedure to settle the issue.

The panel in a statement said Tata Steel, Corus and CSN have accepted this ruling.

Industry observers feel that after today’s development, the Tatas were unlikely to pull out of the Corus race without another revision of their bid price.

This is also probably the first time that the Tata group is engaged in a bidding war for an acquisition.

The Takeover Panel’s ruling marginally lifted the Corus stock on the London Stock Exchange to 529.5 pence, up 0.28 per cent.

Citing relevant rules, the panel said in an announcement on the London Stock Exchange, if a competitive situation continues to exist till shortly before January 30, an auction procedure would be implemented.

The takeover panel said any revised offers that come “shortly before January 30” would have to go through the auction process, the terms of which will be determined by the panel executive.

In case the auction is to be initiated, an announcement will be made by the panel executive at an appropriate time.

The panel intervened at a time when Corus has received three bids — two by Tata Steel and one by CSN.

When Tata Steel unveiled its 455-pence-a-share offer and the Corus board recommended it and posted the offer document for shareholders on November 10, everybody thought it to be a done deal.

However, persistent market rumours for a rival bid came true on November 17 when CSN said it had approached the Corus board with a 475-pence-a-share offer.

In order to facilitate CSN’s due diligence, Corus adjourned a court meeting and an extraordinary general meeting scheduled to decide on the Tata offer on December 4 and a fresh date was set for December 20.

Tata Steel sprang a surprise on December 10 with a 10 per cent increase in its offer price by agreeing to pay 500 pence a share.

However, its joy was short-lived as CSN came up with a 515 pence offer within 12 hours on December 11.

At this point of time, both Tata Steel and CSN have the right to revise their offers. Potentially, this could have continued indefinitely. Today’s move is an effort by the panel to set an outer limit to end the uncertainty in the interest of the shareholders.

Following the panel’s announcement, Corus said it is continuing with its earlier resolution to postpone tomorrow’s EGM.

“The company expects the competitive situation to be resolved by January end,” it added.

The panel’s move gains in significance as both Tata Steel and Corus were pursuing court-mandated ‘scheme of arrangement’ procedure for Corus acquisition, instead of a ‘takeover route’ governed by the City Code of Takeover & Merger.

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