The Telegraph
Since 1st March, 1999
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Date set to decide Corus fate

Calcutta, Nov. 2: Tata Steel will face the Corus test on December 4.

A UK court has provisionally fixed that day as the date for holding an extra ordinary general meeting (EGM) when Corus shareholders will get to vote on the Tata offer.

Merchant banking sources from the UK said Corus would post the offer document to its shareholders next week.

“If Corus can send the documents to its shareholders next week, the meeting will take place on December 4,” sources added.

Tata Steel – which is looking to an amicable deal – has already indicated that the deal will go through only if 75 per cent of the voting rights go in its favour.

Moreover, 50 per cent of the shareholders present at the meeting must also approve the transaction.

If both the conditions are met and the deal goes through, it will still have to be ratified by the UK court.

The offer document, which the Anglo Dutch steelmaker will send out to shareholders next week, will detail when the shares are to be tendered, money paid in return and the deal concluded.

“We are hoping the deal to go through by end of January,” the sources added.

However, Tata Steel has to cross another hurdle before the court convened meeting takes place. It will also have to move the antitrust body of the European Commission for approval.

Tata Steel has offered 455 pence a share for Corus. However, the Corus stock is trading at 468.5 p at the time of going to the press.

Corus shares have consistently traded higher than the Tata offer price when it was disclosed by India’s largest private sector steel maker on October 17.

Standard Life, the largest shareholder of Corus, has voiced its objection against the Tata offer saying the price is low. Its concern was echoed by Anthony Bamford, chairman of the earthmoving equipment maker JCB.

Apart from buying 330,000 tonnes of steel from Corus, JCB also holds just over 2 per cent of the shares.

Industry observers pointed out that the possibility of a counter bid, especially from Brazilian steel maker Companhia Siderurgica Nacional (CSN), has kept the Corus share trading higher than the offer. There is no timeframe that binds a rival company to make a counter offer for Corus Group Plc.

According to the City Code for Takeover & Mergers in UK, a competing offer can come any time, even after December 4. “Technically, it can come at any point of time. But sooner one does it the better,” a takeover code expert in the UK explained.

Takeover experts in the UK feel that it would be wiser for CSN or any other company to make a counter offer before shareholders decide one way or other.

According to the UK law, there only two ways to do the takeover – the court monitored scheme of arrangement and an ‘offer’ route.

Since the Corus management has already approved a scheme, it cannot propose another one.

Thus, the rival bid will have to come through the offer route and it will have to be on the table for 60 days. If CSN decides to throw its hat in the ring, it must rustle up at least 50 per cent support for its offer.

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