| Ratan Tata and James Leng in London on Friday. (AFP)
London, Oct. 22: Britain’s Sunday newspapers today speculated that Tata Steel’s £4.3-billion bid to take over Corus may face a challenge either from a Brazilian or a German steel company.
Corus officials, who emphasise that Tata is the preferred partner, declined to comment on a report in The Sunday Times which said: “The aggressive Brazilian steel group CSN has appointed Lazards, the top-flight investment bank, to advise on its options for gatecrashing Tata Steel’s agreed £5.1-billion takeover of Corus.”
The cost of Tata’s takeover comes to over £5 billion when servicing Corus’s debts and payments to its pension funds are taken into account.
“Also circling is ThyssenKrupp, the German steel giant, which has a market value of £9.4 billion,” added the paper.
ThyssenKrupp denied it was mulling a counter-offer. “We are not considering a bid for Corus,” a Thyssen spokesman said.
The paper pointed out that speculation about a counter-bid was “fuelled by comments from Standard Life, which, with an 8 per cent stake, is Corus’s biggest single shareholder”.
Standard Life said last week: “The offer by Tata for Corus is lower than we would have expected the board of Corus to agree to and recommend.”
Among other institutional investors, Hervé Mangin, manager of Axa’s European Opportunities fund, also said: “I think Tata’s bid is too low.”
Corus officials would be happier if the Tata group would make more of an effort to explain to the British public that it is a socially responsible employer.
It is easy to see why there is worry about jobs at Port Talbot, the South Wales plant that is Corus’s biggest steel-making operation. This makes plate steel for $320 a tonne. Jamshedpur, Tata Steel’s base, runs at $160 a tonne.
“There is a lot of anxiety here,” said Anthony Taylor, a worker at Port Talbot who is also a local councillor. “But people understand the reality that Corus is now a small player in world steel.”
Taylor, who is probably unfamiliar with the ways of Parsis, said the Tata takeover had sparked some black humour at the plant. “The boys were asking the other day if we would have to wear safety turbans now.”
However, there have been voices in support of Tata.
Hywel Francis, the Labour MP for Aberavon, has said: “Overall, we feel that this is a good thing. There is a sense of cautious optimism with the unions, while the management is less cautious. Corus has been looking for some sense of re-alignment and this takeover is as good as it can get. It is a highly responsible company in India with a good relationship with the community and the government.”
Even the Sunday Times has acknowledged that “any rival will face a tough obstacle in the shape of Corus’s pension trustees. The trustees of the two main pension schemes, which have assets — and future liabilities — of £13 billion, more than twice the value of the company, have backed Tata’s bid. Their support was only won by Tata after weeks of delicate negotiations.”
Tata Steel is paying £126 million into one of the company’s three pension schemes. It has also agreed to increase company contributions into the larger scheme from 10 per cent to 12 per cent for two years.
The Sunday Times said: “Despite the fears of Corus workers, the company now faces a much brighter future than could have been predicted even four years ago. In those days it flirted with financial disaster, its shares sinking as low as 20 pence, and it staged a £300 million rights issue in 2003. The deal has also made Ratan Tata a hero, or even more of a hero, in India.”
One London-based investment banker was quoted by the Observer: “I am sure that Tata does not want (Lakshmi) Mittal to steal all the glory. There is always an element of egotism somewhere in the equation.”