The Hindu : Front Page : Standoff in Corus bid

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Wednesday, Jan 31, 2007
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Standoff in Corus bid

Tatas, CSN wait for the other to blink

London: Indian corporate giant Tata Steel and Brazil's Companhia Siderurgica Nacional (CSN) on Tuesday entered the auction ring for the prized trophy — Anglo-Dutch steelmaker Corus group.

Nearly two hours into the auction, however, things appeared more like a Mexican standoff with the two suitors failing to come up with a bid.

Sources said bids were yet to come through the auction process, as the rivals waited for the other to blink first.

Analysts said each was delaying its offer to give minimum possible reaction time to the other. This is also meant to keep the price as low as possible, as the more the bidding rounds, the higher the price they would have to quote.

If the auction stretches to the maximum nine rounds, the price could go beyond 600 pence per share, valuing Corus up to over $ 11 billion, the analysts said.

They, however, said it might not be a surprise if one of the two suitors came up with a much higher bid in the first round itself pre-empting the other.

The auction called by the U.K. Takeover Panel to decide the winner began at 10 p.m. Indian time (1630 hrs GMT).

Tata Steel had bid $ 9.2 billion (£4.6 billion) against CSN's much higher $ 9.6 billion (£4.9 billion) last month, prompting the panel to intervene.

Ahead of the auction, Tata Steel's Board met presumably to discuss strategy, besides approving the earnings for the October-December quarter, during which it had submitted its preliminary bid.

While Tata Sons Director Arun Gandhi, along with investment bankers and advisers, is camping here, CSN said its team would be based at the offices of Lazard, its main investment banker in the West End office.

If no winner emerges in the first eight rounds of open bidding scheduled to be completed on Wednesday, presumably even by electronic offers, the panel will go in for a ninth and final round on February 1.

Under the auction norms, each suitor is required to raise bids by a minimum of five pence a share.

Tata Steel's 500 pence a share bid had been countered by CSN with 515 pence. No matter who wins, the new entity would become the world's fifth largest steel maker.

— PTI

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