Corus Bid Fight Nears End Game
By Sarah Davies; John Cranage
The head-to-head bid battle for former British Steel firm Corus, which employs nearly 2,000 people in the West Midlands, was set to be resolved last night.
The pounds 5 billion auction involving Brazilian firm CSN and India’s Tata Steel has been established by the UK’s Takeover Panel and will consist of up to nine bidding rounds that started at 4.30pm yesterday.
The winner was expected to be announced in the early hours of this morning – but if no victor emerges the process will begin again at 4.30pm.
The auction was being held in private, with no updates expected until the final announcement at 3am.
A tie-up of either CSN or Tata with Corus would create the world’s fifth largest steel group capable of producing about 24 million tonnes of steel a year.
The fight for Corus, which runs a strip steel operation at Halesowen and stockholding cenres at Wednesfield and Oldbury, began in October when Mumbaibased Tata tabled a pounds 4.1 billion bid. An improved offer of pounds 4.7 billion was recommended to shareholders by the Corus board in December. CSN then weighed in with a offer of pounds 4.9 billion, or 515p a share. Reports have since speculated Tata could be prepared to raise the stakes by paying between 530p and 550p a share.
Corus shares gained 3p yesterday and closed at 563p. Both Tata and CSN have had their takeover offers approved by the European Commission on the grounds that a tie-up between Corus and either company would not hamper competition in the European Economic Area.
In addition, CSN said it would pay pounds 138 million into the Corus Engineering Steels pension scheme compared with the pounds 126 million proposed by Tata. Both firms have agreed to increase contributions to the scheme from ten per cent to 12 per cent until March 2009.
Last year Corus was the ninth largest steel producer in the world with 18.2 million tonnes of output. It banked pre-tax profits of pounds 580 mill ion on turn over of pounds 10.14 billion, although lower selling prices and higher costs hit operations in the first half of this year.
Corus, which was set up through the merger of British Steel and Dutch rival Hoogovens in 1999, employs 47,300 people worldwide including 24,000 in the UK.
Last year Tata Steel, part of the Indian conglomerate Tata Group, was ranked 56th in the list of steel makers around the world with output of 5.3 million tonnes.
The Tata Group has operations in more than 54 countries across six continents and the companies export products and services to 120 nations. Its steel arm was set up in 1907 and is now India’s biggest private sector steel firm.
The company claims to be among the lowest-cost steel makers in the world and its products are targeted at the automotive and construction industries. A tie-up with Corus would give Tata its first exposure outside Asia.
CSN, founded as a stateowned company in 1941, first attempted a tie-up with Corus four years ago but was rebuffed because of concerns over the health of the Latin American economy.
The firm was privatised in 1993 and is now one of the largest integrated steel companies in Latin America.
It ranked 48th in the list of global steel makers with output of 5.6 million tonnes.
The company is one of the biggest low-cost steel producers due to huge stockpiles of iron ore in its Casa de Pedra mine in Minas Gerais, which yields 16 million tonnes annually. The supply helps CSN maintain some of the highest profit margins in the industry and would allow Corus to become self-sufficient.
FACTFILE
World crude steel output reached 1,239.5 million tonnes in 2006 – an increase of 8.8 per cent compared with 2005.
The top 10 steelmakers, ranked by output in millions of tonnes in 2005: Mittal Steel (Netherlands) 63.0 Arcelor (Luxembourg) 46.7 Nippon Steel (Japan) 32.0 Posco (South Korea) 30.5 JFE Steel (Japan) 29.9 Shanghai Baosteel (China) 22.7 US Steel (USA) 19.3 Nucor (USA) 18.4 Corus (UK) 18.2 Riva (Italy) 17.5
CHRONOLOGY
Here is a chronology of key events in the battle to acquire Corus.
October 17, 2006 – Tata Steel proposes a pounds 4.1 billion takeover of Corus at 455p a share in cash. October 20 – Corus board approves Tata bid.
November 17 – Brazil’s Companhia Siderurgica Nacional (CSN) unveils a proposal to pay 475p per share for Corus, topping Tata’s 455p agreed offer.
November 27 – Corus adjourns extraordinary shareholders’ meeting from December 4 to December 20 to allow CSN more time to consider a counterbid.
December 10 – Tata Steel raises bid to an agreed pounds 4.7 billion, or 500p per Corus share. Corus board recommends revised offer to shareholders.
December 11 – CSN says it has agreed to buy Corus for pounds 4.9 billion at 515p a share in cash.
December 19 – Britain’s takeover watchdog sets a January 30 deadline for Tata Steel and CSN to make revised offers.
December 22 – Tata Steel wins approval from the European Commission to buy Corus.
January 26, 2007 – Britain’s takeover watchdog says it will launch an auction procedure on January 30.
January 29 – EU clears CSN bid for Corus.
(c) 2007 Birmingham Post; Birmingham (UK). Provided by ProQuest Information and Learning. All rights Reserved.