The Hindu Business Line : Top brokers upgrade target price for Corus

In an instant response to the counter bid by CSN for Corus Group Plc, the majority of the top European broking firms and fund houses put out client notes on Saturday upgrading short-term target price for the Corus stock ranging between 500 and 530 pence.

The notes also expected that CSN would move the Corus management this week for formal opening books for due diligence. CSN could launch a formal offer within next three weeks before the EGM on December 4 for Corus's shareholders to consider Tata's offer.

Meanwhile, brokerages active in Corus on the LSE suggested that share prices of Corus have been ruling higher than the Tata offer price despite many of the of prominent investors - including AllianceBernstein LLC and Jupiter Asset Management - having exited. "It is now clear that CSN has been picking up Corus shares through front firms without informing the LSE during the bid period," said a source close to one of the Corus investors, on condition of anonymity in an e-mail to Business Line.

CSN has announced that it "indirectly" owns 3.8 per cent in Corus now. Interestingly, some 13.2 million Corus shares changed hands at 473.14 pence a share at 2.54 p.m. (GMT), about 40 minutes before CSN's announcement on Friday London time, according to LSE records.

The CSN move for Corus, some analysts said, was reminiscent of its unexpected bid for CVRD in 1997.

It had acquired controlling stake in the Brazilian miner CVRD along with a group of investors and also got its own purchase (16.3 per cent) financed by a $1.1-billion loan from a relatively unknown NationsBank. "CSN has been unpredictable with Corus too in the past. After advancing a merger agreement, it terminated the deal, citing `ongoing uncertainties in the global business environment' in 2002.

Media reports then suggested that CSN was concerned about Brazil's unstable economy and a possible clash of business cultures," said a merchant bank official. Businessweek recently indicated that the fortunes of the CSN management were on the decline owing to a large debt it had accumulated to finance acquisitions. It suggested that the top brass had differences with other financial and equity partners in CVRD.

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