The Telegraph
Since 1st March, 1999
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Corus countdown to Tata bid

Calcutta, Oct. 23: Corus shareholders have about 50 days to decide whether or not to accept the Tata buyout offer provided no rival bid is on its way.

Tata Steel UK will move the court next week to seek the date for an extraordinary general meeting (EGM).

Merchant banking sources in London said the EGM would take place in the middle of December and the entire process is expected to be completed by January 2007.

However, there is no timeframe that binds a rival company to make a counter offer for Corus Group Plc.

Under the City Code for Takeover & Mergers in the UK, a competing offer can come any time, even after the court-convened meeting where shareholders are expected to decide on the Tata Steel bid.

“Technically, it can come at any point of time. But the sooner one does it the better,” a takeover code expert from the UK explained.

There have been reports that Brazilian steelmaker Companhia Siderurgica Nacional (CSN) is preparing a counter-offer for Corus and has appointed merchant banker Lazard for that.

When contacted by The Telegraph, a Lazard official offered no comment.

Experts feel that it would be wiser for CSN or any other company to make a counter-offer before the shareholders decide one way or the other by mid December.

Under the UK law, there are only two ways to seal a takeover — a court-monitored scheme of arrangement or an ‘offer’.

The Tatas are taking the first option and are seeking support of at least 75 per cent of the Corus shareholder base. Since the Corus management has already approved a scheme, it cannot propose another one.

Thus, the rival bidder will have to take the “offer route”; the offer will have to be open for 60 days after the documents are posted. If CSN decides to throw its hat into the ring, it must muster minimum 50 per cent support for its offer.

The Corus shareholders would have to be given a minimum of 21 days’ notice for the court convened shareholder meeting.

The Indian company will also have to post the offer document detailing the scheme of arrangement by which it wants to take over the Corus Group.

Before the court convened meeting takes place, Tata Steel UK will also have to move the anti-trust body European Commission for approval.

Tata Steel UK will get 14 days to make the payment to the general shareholder and the ADS holder. The outside limit to wrap up the deal has been fixed at July 20 next year.

The Corus share was trading at 471p late in the evening on the London Stock Exchange. It was among the five most traded stocks on LSE.

Persistent rumours of a counter-bid has kept the stock price above the Tata offer, which was vetted and approved by the Corus board on October 20. Tata Steel signalled its interest in bidding for Corus on October 5. The announcement spiked the stock price which, until then, had hovered around 390p.

There is a lot of irony that surrounds the bid for the Anglo-Dutch steelmaker. And it stems from the fact that CSN and Corus had come close to a merger four years ago.

In July 2002, Corus had agreed to a merger with CSN, Brazil’s largest steel producer. Under the terms of the deal that was hammered back then, Corus shareholders would hold 62.4 per cent of the merged group and CSN 37.6 per cent.

The deal came apart in November of the same year after Corus expressed strong misgivings about uncertainties in the global business environment. The company was apparently concerned about Brazil's unstable economy and a possible clash of business cultures.

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