The Telegraph
Since 1st March, 1999
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Tatas, CSN set for Corus duel

Calcutta, Jan. 21: With less than 10 days to go before the deadline for submitting revised bids for Anglo-Dutch steelmaker Corus, the stage seems set for an auction for the world’s eighth largest steel maker.

Neither contender — India’s Tata Steel nor Brazil’s Companhia Siderurgica Nacional (CSN) — has revealed its strategy. As of today, CSN has its nose ahead with a higher price bid (515 pence a share), but the Tatas are expected to come back into the game with a higher bid.

It could go down to the wire with CSN’s top management publicly vowing to acquire Corus at any cost and the Tatas equally determined to fight till the end.

On December 19 last year, the UK Takeover Panel had said an auction process would be initiated if “the competitive situation continues to exist shortly before January 30”.

The auction method — never used till now in UK’s rich, fable-ridden corporate history — will be employed if neither bidder chooses to leave the high-stakes table.

The Takeover Panel has said its executives will determine how the auction process should proceed. The exact auction process will be decided by the panel in consultation with Corus and the two bidders.

The Telegraph learns that if both bidders remain in the fray at the end of deadline, the Tatas and CSN could be given three more days after January 30 to make revised offers as part of the auction process.

John Bennett, head of corporate law at London-based law firm Berwin Leighton Paisner LLP, said, “The parties (Tata and CSN) will then typically be given the opportunity to revise their offers once only on Wednesday, January 31. If neither bidder does so, the auction procedure will end and no new or revised offers may be announced.”

If either bidder announces a revised offer on Wednesday, each bidder will be given a further opportunity to announce a revised offer (once only) on Thursday, February 1. If either bidder announces a revised offer on Thursday, they will each typically be given one last chance to revise their offers on Friday, February 2.

But no new or revised offers will be permitted after that date.

Bennett reckons that the Takeover Panel may lay down a condition that any revised offer “must represent a minimum increase in the consideration offered by the relevant bidder”.

If two Corus management-backed schemes of arrangement remain on the table at the end of the auction procedure, the Corus board will typically recommend one of them and put this to the vote at the scheme meeting.

If this is approved, that will be the end of the matter and there will be no need for a meeting to decide on the second scheme.

“It is also possible for the board of Corus to put both schemes to the vote. But this would only arise in the unlikely event that the board did not make a recommendation because the offers are on exactly the same terms,” said Bennett.

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