The Telegraph
Since 1st March, 1999
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Buzz of Corus rising for Tata

London, Oct. 19: Corporate India’s biggest and most significant overseas acquisition seemed set to go ahead tonight with the board of Corus poised to recommend Tata Steel’s proposed £4billion-plus takeover of the Anglo-Dutch firm, according to sources.

A spokeswoman for Corus, the eighth largest steel firm in the world, would only say: “We are aware of our responsibilities. If the board made a decision, it would have to report it to the (London) stock exchange.”

However, reports that the Corus was prepared to recommend Tata Steel’s cash offer of 455 pence a share were carried by the Financial Times website, Dow Jones and Reuters.

Reuters and the FT website put the value of the deal at $7.7 billion (£4.1billion).

The Corus spokeswoman declined to react to the market reports or even confirm that its board had met to discuss Tata Steel’s offer.

Lord Swraj Paul, who has built up Caparo Steel in the UK, told The Telegraph: “They are both very good companies. Corus is the best in Europe, Tata Steel is the best in India. I think a combination would be a win-win situation for both of them.”

He said the decision would be ultimately one for the shareholders, “whether they should take the money or wait for someone else to come along with a better offer. It is always a question of price. The shareholders are only interested in the money”.

He pointed out that in the case of Mittal Steel’s bid for Arcelor, shareholders had been offered part money and part shares, “so it was different. The shareholders wanted to know what sort of company it would be”, said Paul.

Unlike the French government, which initially opposed the Mittal bid, the British — and the Dutch — have been relaxed about the approach from Tata Steel.

Even before the Tata Steel deal, the FDI going into India this year, amounting to between $7 billion and $8 billion, had been exceeded for the first time by the FDI coming out of India to finance Indian acquisitions overseas.

Corus, which was set up through the merger of British Steel and Dutch group Hoogovens in 1999, employs 47,300 people worldwide, including 24,000 in the UK at sites, including Scunthorpe, Rotherham and Port Talbot. Last year, it banked pre-tax profits of £580 million on turnover of £10.14 billion.

Tata Steel is the 56th biggest producer in the world with 4.4 million tonnes of output.

There have been reports, probably unfounded, that Tata Steel feared that it would be the target of a hostile takeover bid by Lakshmi Mittal’s enlarged Arcelor-Mittal behemoth, the biggest steel firm in the world with a combined capacity of well over 100 million tonnes.

A Corus-Tata Steel tie-up would create the sixth biggest steel firm in the world.

Reuters was told by a source that Corus would announce its pro-Tata decision tomorrow.

“A deal would be the largest foreign takeover by an Indian company and would follow Mittal Steel’s $31 billion acquisition of rival Arcelor this year as consolidation in the steel sector gathers pace,” it said.

The FT website said the decision by Corus “will throw down the gauntlet to any potential counter-bidders for the world’s eighth biggest steelmaker. Novolipetsk and Severstal, two Russian steel companies, and CSN, a Brazilian steelmaker, are thought by some steel industry observers to be interested in making a counterbid.”

There have been attempts in the last couple of days by the City to talk up the value of Corus by suggesting there would be bidders other than Tata Steel.

The FT report was met with disappointment in the City where analysts had at one stage suggested that Corus would fetch as much as £5.6 billion, or 580 pence a share.

Shares fell 2 per cent today to 475 pence — still above the Tata offer price.

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