The Hindu Business Line : Corus: Counter bid hurdle goes for Tatas

Tata Steel seems to be heading for a walkover in its $8 billion agreed bid to acquire Corus Group Plc. After Severstal on Friday described the Tata offer of 455 pence a share unjustifiably "overvalued" and rejected the possibility of a counter bid, the Corus stock shed 50 pence to close at 467.50 pence on the LSE.

London merchant banking and fund circles told Business Line late on Saturday (IST) that Serverstal's deputy chief executive Mr Thomas Versazio's statement to Financial Times immediately reduced speculative interest in Corus.

Merchant bankers also discounted a rival bid by Brazil's CSN saying that it lacked financial muscle to top the Tata offer.

"Severstal's comment on the valuation of Corus also diminished an attempted bargaining clout by a couple of existing shareholders, who expected Tatas would revisit the offer before the EGM next month," said an analyst.

Standard Life, which holds 7.86 per cent in Corus, and JCB, another shareholder, publicly expressed unhappiness over a "low" price offer by Tata Steel.

However, sources close to the development suggested that as at the EGM Corus requires 75 per cent of the voting rights to push through the resolution, the opposition representing not more than 10 per cent voting rights would hardly be a hurdle.

Theoretically, however, any counter offer can come up till the deal becomes effective.

According to the agreed timeline, the deal may come into effect mid-January 2007 after the EGM and court approvals are obtained.

Corus has around 1.58 lakh registered shareholders, of which institutional investors account for 90 per cent of the paid-up capital, while the rest is represented by private individual investors.

More Stories on : Steel | Mergers & Acquisitions | Stocks | Tata Steel Ltd

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