The Telegraph
Since 1st March, 1999
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CSN set to table formal Corus bid

London, Dec. 10: Tata Steel’s Brazilian rival, Companhia Siderurgica Nacional (CSN), is poised to put in a formal bid for Corus, the Anglo- Dutch group, it was reported today.

Corus shareholders should have met on December 4 to decide which bid they preferred but their meeting has been postponed until December 20 to allow CSN to complete its due diligence.

This has now been done and it is expected that CSN will offer 475 pence a share, 20 pence more than the 455 pence a share from the Tatas that Corus’s board had recommended.

However, the game has now changed, and the board of Corus is duty bound to do the best for its shareholders.

What is not clear is whether CSN will be able to make the same commitment on pensions and take on Corus’s past debts that Tata had made.

It is generally being assumed in London that the Tatas’ bid will succeed only if it is able to come up with a better offer.

Different from Mittal

There is one significant difference between now and when Lakshmi Mittal made a bid for Arcelor. Then, the Indian government, led by an aggressive Kamal Nath, Union commerce and industry minister, had championed Mittal’s case.

This time, there has been very little Indian government support, even behind the scenes, for Ratan Tata. The Indian High Commission in London has had little to say on the subject, even though some media reports have spoken disparagingly of Corus “falling into foreign hands”, while the Brazilian approach is seen as a possible merger of two steel companies.

One reason why the Brazilians are viewed as less foreign is that many of their top footballers are familiar figures in English and European football.

Frantic bargaining

Corus employs 47,300 people worldwide, but 24,000 of them are located at UK at sites at Port Talbot, Scunthorpe and Rotherham.

The value of the Tatas’ bid has been put at £4 billion, though Ratan Tata has given the figure as £4.3 billion. When debts are taken into account, the figure goes up to £5.1billion.

CSN could have bought Corus in 2002 but did not do so. Over the past year, CSN and Corus held talks but these came to nothing. It was only after the Tatas’ offer was recommended by the Corus board that CSN appeared to wake up and do everything in its power to stop the Tatas acquiring the Anglo-Dutch group.

A deal with either Tata or CSN would create the world’s fifth largest company.

Pension funds

There could be possible problems with CSN’s offer, as the Sunday Telegraph pointed out today.

“It is understood that a potential hurdle to CSN launching its offer lies in securing agreement from the Anglo-Dutch group’s pension fund trustees. As of last night, CSN’s advisers, from the investment bank Lazard, had yet to get the green light,” it reported.

The paper added: “Trustees of the two main Corus schemes, which have assets and future liabilities worth substantially more than the value of the company, have already agreed to back the bid from India’s Tata. The size of the liabilities means that the Pensions Regulator could stop any takeover unless the bidder guarantees the future of the pension funds, or has trustee backing.”

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