Tata raises bid, averts CSN from acquiring Corus
India’s Tata Steel Ltd. raised its bid for Corus Group Plc, the U.K.'s largest steelmaker, to an agreed 4.7 billion pounds ($9.2 billion) on Sunday in an attempt to head off a potential counter bid from Brazilian group Cia Siderurgica Nacional (CSN).
Mumbai based Tata steel raised its offer to 500 pence a share in cash up 10 per cent from a previous cash bid of 455 pence. That is 5 per cent higher than the 475 pence a share bid made November 17 by CSN.
"The revised acquisition terms from Tata Steel are a substantial increase from the previous offer," Corus Chairman Jim Leng said in a statement. "Accordingly, the Corus board is pleased to recommend this to Corus shareholders.”
Corus' board was apparently about to recommend the CSN bid after a meeting yesterday, but was waiting for consent of the pension trustees. A decision was in the vicinity but Tata's decision to raise its bid will make it hard for CSN to return.
CSN is believed to hold just £1 billion of equity to fund the deal, compared with the Indian steelmaker’s £2.5 billion.
Both Tata and CSN want to acquire London-based Corus to add up mills in Europe that supply automakers such as Ford Motor Co. and enhance bargaining power with clients and suppliers.
“Tata are trying to beat CSN to the punch,'' said Michelle Applebaum, who runs her own steel research firm in Highland Park, Illinois. “CSN may respond by raising its offer,” she said. “There's a 50-50 chance CSN will try to outbid them.''
Ratan Tata, the Chairman of Tata steel was confident of his company's latest move. "We remain convinced of the compelling strategic rationale of this partnership and the revised terms deliver substantial additional value to Corus shareholders," he said.
The deal would be the largest by an Indian company and mark the industry's second-biggest transaction in 2006, after Mittal Steel Co.'s $38.3 billion takeover of Arcelor SA.
