London, Oct. 20: Tata Steel’s £4.3-billion offer was accepted by the Corus board today in London where a banker who had advised Ratan Tata described what would be corporate India’s biggest overseas acquisition as a “pre-Diwali gift-wrapped present to the nation”.
At a news conference in the offices of Deutsche Bank, one of the financial institutions which have been working behind the scenes for a year, Tata said: “For us in India, this is a very important moment in time.”
Technically, however, it’s not a done deal. Shareholders of Corus will have to agree that no one else will come along to improve on Tata’s offer of 455 pence a share in cash.
Rival bids are unlikely as Corus chairman James Leng confirmed that “the company held talks with a number of parties from Brazil, Russia and India. This transaction represents the culmination of these talks”.
This means Corus has already had unsuccessful discussions with the three companies — two Russian and one Brazilian — mentioned as possible Tata competitors.
Trouble, however, appeared elsewhere with Standard Life Investments, which holds around 7.9 per cent in Corus, opposing the Tata offer.
The investor said the offer was lower than it had expected the Corus board to recommend. A spokesperson said: “The trading performance of Corus has been very strong and produced very attractive cash flows which we believe could be worth more than the current price being offered by Tata.”
Earlier, the Corus board formally recommended to its shareholders the Tata offer.
“(The deal) puts together two companies that have a rather similar global view, two complementary companies in terms of what they bring together, and two companies that share common values and business philosophies,” Tata said.
As if reading from the same hymn sheet, Leng said: “This combination with Tata, for Corus shareholders and employees alike, represents the right partner at the right time at the right place and on the right terms.”
The acquisition will be made through Tata Steel UK, wholly owned by Tata Steel, which now ranks 56 in the industry pecking order but will be taking over a company that is world number eight. Together they will be the world’s fifth largest steelmaker.
Just when people thought the news conference would end without someone mentioning the dreaded “M” word, Tata was told that even the combined Tata Steel-Corus capacity of 23 million tonnes would leave him way behind Lakshmi Mittal’s 100 million tonnes.
“I don’t think our sights are set on trying to equal or better Lakshmi Mittal,” said Tata. “Our sights are on a strategic fit.”
Under the deal, Tata will become chairman of Corus and Leng will be deputy chairman of Corus and Tata Steel. Each company will have three representatives on the other’s board.
A beaming Jitesh Gadhia, of ABN AMRO corporate finance which advised Tata Steel, told The Telegraph: “This is the largest single transaction far and away that an Indian corporate has done overseas. Pre-Diwali it’s almost like a gift-wrapped present to the nation.”