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Thu, Feb 01, 2007 - Page 10 News List

Tata outbids CSN to take over Corus

EXPANSION India's Tata Steel could become the world's fifth-largest steelmaker after winning the bidding battle against CSN for Corus Group with a US$11.3 billion offer


India's Tata Steel said yesterday it outbid Brazilian rival Companhia Siderurgica Nacional SA (CSN) to take over European steelmaker Corus Group PLC, offering US$11.3 billion for the biggest-ever acquisition by an Indian company.

The winning bid values shares of London-based Corus at ?6.08 (US$11.91) each, ?0.05 higher than the final offer made by CSN, said a statement from Tata Steel Ltd, which is part of the Tata Group -- a sprawling business conglomerate with interests spanning salt to software.

The new offer represents a 22 percent premium of the US$9.2 billion Tata Steel had offered in October, an offer later trumped by CSN, the statement said.

The acquisition will help expand Tata Steel's reach into Europe and propel the company, currently ranked 56th in the world in output, into a global player in the metal business, Ratan Tata, chairman of the Tata Group, told a news conference in Mumbai.

A combined Tata-Corus could produce 25 million tonnes of steel a year, making it the world's fifth-largest steel producer.

"Over the next few years, we will come to think this was a very visionary move that has had long-term repercussions that are very positive for India," Tata said.

"When we made our first bid to acquire [Corus] many thought it was an audacious move," he said. "I am glad to say [that] we were able to win the auction away from the Brazilian company, and happily Corus has been acquired by an Indian company."

The move also continues the consolidation in the global steel industry after Mittal Steel Co NV's deal to acquire Arcelor SA to create a powerhouse with a 10 percent share of the global market.

The UK Takeover Panel called the auction to end a bidding war after Brazil's CSN last month made a ?4.9 billion (US$9.6 billion) bid for Corus that topped a sweetened offer of about US$9.2 billion by Tata Steel.

The panel presided over the auction process that started on Tuesday evening and continued for several hours until CSN bowed out.

The outcome of the auction now awaits approval by the board of Corus and then its shareholders.

The European Commission had earlier cleared Tata Steel and CSN as eligible to make a possible acquisition of Corus, which has been searching for a business partner with assets in low-cost countries as rising raw material and energy costs in Britain and the Netherlands chip away at profits.

Some analysts argue that further consolidation will give the industry more pricing power and greater economies of scale.

Corus -- formed in 1999 when British Steel and Koninklijke Hoogovens of the Netherlands combined -- has plants in Britain, the Netherlands, Germany, France, Norway and Belgium.

It sells steel and aluminum products worldwide, and employs 47,300 people, but has one of the highest costs of production among global steelmakers.

Asked about potential job losses at Corus, Tata Steel's managing director B. Muthuraman said that a more globally competitive company would put its employees in a safer position.

"The best safeguard for jobs is to make the company competitive. Today Corus is less than competitive," Muthuraman said.

The Corus takeover would be the latest in a string of overseas acquisitions by top Indian companies, which are seeking global visibility after decades of thriving on government protection.

India's Commerce and Industry Minister Kamal Nath welcomed the news, saying "this means the global perception of India is changing."

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