The Telegraph
Since 1st March, 1999
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Corus battle enters penalty round

London, Jan. 27: The battle for Corus will be decided by the dramatic equivalent of a penalty shootout between Tata Steel and Brazil’s CSN, with the latter tipped to emerge as the winner by Britain’s financial experts — unless Ratan Tata is determined to throw everything into the final bidding process.

Britain’s takeover panel last night announced the complicated rules of the endgame but basically who wins the Anglo-Dutch group will be settled by up to nine rounds of auctioning, with each bid having to be at least 5 pence higher than that offered by the other side.

The auction will start at 4.30 pm GMT (10 pm in India) on January 30, and run until 2.30 am on Wednesday, January 31, with the panel making an announcement at 3 am. If it is not completed by 2.30 am, the auction will be frozen until 4.30 pm, with an announcement at 3 am on February 1.

What can be guaranteed is that there will be a lot of sleepless nights between now and then.

Corus shares closed on Friday in London at 558p, which means the company is now grossly overvalued. However, its value is what the two duellers are prepared to pay for the company.

CSN’s last offer of 515p a share, which values Corus at more than £5 billion, trumped Tata’s bid of 500p last month.

CSN’s advisers are Lazard, Goldman Sachs and UBS.

The Tata team includes NM Rothschild, Deutsche Bank and ABN Amro. Whoever wins will be a long way behind Lakshmi Mittal in capacity but nevertheless form the fifth-largest steel group in the world, with access to European markets and Corus’s steel-making facilities.

Today’s Daily Telegraph pointed out: “If the auction reaches the ninth and final round, the bidders will have the option of either making a final offer or of making an offer and stating that, if the rival bid is higher, they will exceed it by a certain amount. They must state the maximum price they are prepared to offer.”

It tipped Brazil to win: “It has been speculated that Tata has enough financial firepower to raise its offer to about 550p a share but that CSN has the greater desire to win Corus and may go as far as 600p.”

But the paper also quoted a banker who said: “Both sides will know in their minds how much they can afford without hurting shareholder value. But who knows what might happen when you are up against the clock.”

The Times is more hopeful of India’s chances: “Sources close to Tata say that it plans a last-minute bid that is designed to knock out CSN.”

The panel has said both sides have accepted the rules of the dawn shootout.

All that needs to be done is to switch the cameras and microphones from Celebrity Big Brother to the Corus endgame. It would make even better television.

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