Corus Group PLC agreed to be bought by India's Tata Steel in a deal that values the Anglo-Dutch steelmaker at ?4.3 billion (US$8 billion), the companies said yesterday.
The bid for Corus, Europe's second-largest steel producer and eighth-largest in the world, would be the largest takeover ever by an Indian company.
Tata, currently ranked as the world's 56th largest steelmaker, bid ?4.55 (US$8.51) per share. Corus shares were down 1.5 percent at ?4.71 in early trading on the London Stock Exchange.
"This proposed acquisition represents a defining moment for Tata Steel and is entirely consistent with our strategy of growth through international expansion," Ratan Tata, chairman of Tata Steel, said in a statement released by the two companies to the London Stock Exchange.
"We have compatible cultures of commitment to stakeholders and complementary strengths in technology, efficiency, product mix and geographical spread," Tata said.
Corus has previously said it would make sense for the company to team up with a partner with assets in countries such as Brazil, India and Russia.
"This combination with Tata, for Corus shareholders and employees alike, represents the right partner at the right time at the right price and on the right terms," said Jim Leng, chairman of Corus.
Consolidation of the steel industry has been a hot topic since Mittal Steel Co NV won its battle to take over Arcelor SA earlier this year in a deal that will create a titan with control of close to 10 percent of global production.
Corus chief executive Philippe Varin said in a conference call that there would be no job cuts because of the deal.
"This deal is not about job losses. This is about about bringing together global companies with outstanding position," Varin said.
"With this [deal] Corus will become a globally competitive company," he said.
Tata Steel's managing director B. Muthuraman said the two companies will run as parallel entities until they are integrated over the next year.
Tata agreed to inject ?126 million into Corus' pension fund.
Analysts did not rule out a counterbid for Corus amid growing pressure on Russian and Asian producers to expand their global reach, but said the terms of the deal to be completed in January made it less likely.
"In a sector like steel, a lot can change in three months and markets are not ruling out someone else coming in, but obviously if this was serious, the stock would be trading much higher," one trader said.
"While one of the key risks to the transaction is a possible counterbid from another steel group, the deal is recommended by the Corus board and also entails a break fee," Dresdner Kleinwort analysts said in a client note.
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