Calcutta, Jan. 29: The Tata Steel board will meet early tomorrow to hammer out its strategy before a nine-round, nerve-wracking auction bidding process kicks off at 4:30 pm in London (10 pm IST) for Anglo-Dutch steelmaker Corus.

Tata Steel, which will also announce the third quarter results, is pitted against Companhia Siderurgica Nacional (CSN) of Brazil which had ruffed Tatas’ bid of 500 pence per share with an offer of 515 pence last December.

The bidding for Corus will set a precedent in British corporate lore with the UK Takeover Panel laying down a new set of rules for a competitive bidding situation.

Compared to the usual practice of three rounds of bidding, the panel has allowed nine rounds: the first eight rounds will require the two bidders to stump up fixed priced bids with a minimum increment of 5 pence per share over the highest bid made in each round.

The ninth round will introduce an element of poker play: the bidders will be permitted to put up either a fixed priced bid or an innovative formula-based price bid.

It’s this formula-based price bid that introduces an element of risk-taking and the ability to outguess the rival’s bid. Either bidder can say it is ready to offer, say, 10 pence more than whatever the other is ready to pay subject to a maximum offer.

Take a hypothetical situation: let us assume that the Tatas say they are ready to pay 15 p higher than the other, subject to maximum of 595 p. If CSN now raises its fixed price bid from, say, 575p to 597p, the formula offer capped at 595p will lose. In case, the Tatas had made a fixed price offer of 600p, they would have won.

So, it will require a lot of gumption, guts and game theory forecasting methods to go through the final round.

The earliest result could emerge at 3 am London time (8:30am IST) on January 31 if the auction process is completed by then.

If it isn’t over by 2.30 am on January 31, there will be a hiatus of 14 hours before the auction resumes at 4.30 pm on the same day. In such a scenario, the winner will be known by 3 am on February 1.

The impending battle has sent the Corus stock soaring to a seven-year high on the LSE in mid-day trade.

If the two bidders make the same offer price at the end of the ninth round, the Corus board will have the right to recommend either offer after taking into consideration other aspects such as employment prospects of the staff, said John Bennett, head of corporate law at London-based law firm Berwin Leighton Paisner LLP. “Although the target board would not have to make a recommendation in these circumstances, it would almost certainly prefer to do so in an attempt to draw a line under the process and remove any further uncertainty,” he added.

EU nod

CSN today won the EU regulatory approval to buy Corus. The European Commission, which cleared a Tata bid for Corus last month, said a CSN takeover would not hurt competition in Europe because the two have only limited overlaps for semi-finished and finished carbon steel products.