The Telegraph
Since 1st March, 1999
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Extra time for CSN in Corus race

London, Nov. 27: Tata Steel’s Brazilian rival, CSN (Companhia Siderurgica Nacional), is to be given more time by Corus to make up its mind whether or not it wants to make a formal offer for the Anglo-Dutch group, it was announced today.

The extraordinary general meeting of Corus shareholders, which was set for December 4 to decide which bid would be accepted, has now been pushed back to December 20.

A Corus statement said today: “The Board of Corus has decided that it is in the best interests of Corus shareholders to allow CSN some additional time to satisfy its pre-conditions and to determine whether it will put forward a formal offer.”

One interpretation could be that Corus is bending over backwards to allow CSN to beat the Indian offer in its effort to sell to the highest bidder.

Another could be that the Corus board wants to demonstrate to its shareholders that it did the best it could to represent their interests but that, ultimately, it could not persuade CSN to make a formal offer.

In this game of bid and counterbid, the Corus board, which spent a year investigating various options before settling on Tata, may also be making a last-ditch attempt to squeeze more money out of the Indians.

Tata Steel has indicated it will not rush into improving its offer of 455p per share — 20p under the CSN’s bid — until the Brazilians make their formal bid.

Some institutional shareholders have criticised the Tata offer as undervaluing the company. Corus shares fell today on the news in early trading on the London Stock Exchange, slipping 3.75 pence, or 0.74 per cent, to 501.25p.

It could also be argued that Tata offer of £4.3billion for Corus has overvalued the group, which was in poor shape a few years ago, and that it is the Indian interest that has inflated the value of its shares.

The Corus statement today reminded everyone: “On 20 October 2006, the boards of Corus, Tata Steel and Tata Steel UK announced that they had reached agreement. On 17 November 2006, CSN approached Corus regarding a proposal to make a cash offer for Corus at a price of 475 pence per ordinary share. The CSN proposal does not amount to a firm intention to make an offer and it is subject to certain pre-conditions as described in the announcement made by CSN on 17 November 2006, including: completion of confirmatory due diligence satisfactory to CSN; finalisation of financing arrangements; and a recommendation from the Board of Corus. CSN has reserved the right to waive these pre-conditions.”

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