Tata expected to up Corus bid


Tata expected to up Corus bid
Speculation is mounting that India's Tata Steel will raise its proposed takeover offer for Anglo-Dutch firm Corus, in order to see off a higher rival bid made for the firm on Friday.

The board of Corus, the UK's biggest steelmaker, agreed last month to recommend a 455 pence-per-share share acquisition bid proposed by Tata to its shareholders.

But on Friday, Brazil's Companhia Siderurgica Nacional (CSN) confirmed that it had made a 475 pence-per-share offer for the London-based steel manufacturer, in a takeover bid which is 4.4 per cent higher than that put forward by Tata.

According to reports, Corus representatives are likely to meet with CSN officials this week to discuss the Brazilian firm's bid approach, which follows inconclusive merger talks held between the two companies in 2002.

However, analysts believe that Tata, India's largest private steel manufacturer, is not likely to walk away from efforts to acquire Corus and will ensure that the takeover war for the company continues by upping its own offer for the firm.

"We think it unlikely that Tata Steel will walk away from Corus after investing so much time and effort in the process," said Kotak Institutional Research in a note quoted by the Reuters news agency.

"(But) Corus will likely find it difficult to continue to back Tata Steel unless the latter revises its bid upward," the note added.

Meanwhile, Corus shareholders who believe that Tata's current bid is too low have welcomed the intervention by CSN.

"It is not a surprise that another bidder has emerged," insurance firm Standard Life said in a statement on Friday. The insurer has a stake of just over 7.5 per cent in Corus and last month expressed concern that Tata's offer undervalued the company, which was formed in 1999 following a merger between British Steel and Dutch group Hoogovens.

Corus is reportedly keen to form an alliance with a steelmaker in either Brazil, Russia or India in order to access their low-cost, high growth markets, while Tata and CSN are likely to want to tap into surging demand by adding to mills in Europe and boosting bargaining power with their clients and suppliers.

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