Tata wins Corus bid | The big deal

SINGING IN CORUS: The new entity will be world's fifth biggest steel maker.

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New Delhi: It’s perhaps one the biggest international victories for India Inc after the Mittal-Arcelor takeover.

In a keenly-watched auction that stretched into the early hours of Wednesday, India’s Tata Steel emerged victorious in the battle for Anglo-Dutch steel giant Corus, as Brazil’s Companhia Siderurgica Nacional (CSN) withdrew from the race.

The takeover marks the largest acquisition by an Indian firm till date and will propel the new entity led by Tatas to become the fifth largest steel maker in the world.

“We are all very excited, delighted and happy, it’s been a long-drawn affair over nine months, so we are really happy. Last three days have been very hard work. It’s still going on and I am still in the meeting and have to finish off quite a few things that I need to. I got all support from seniors in London and Mumbai. All along I steered the way I thought I should be steering for all the support. I got a call from Corus and the management is delighted that we have won,” said Director of Tata Group, Arun Gandhi.

At this rate, the Corus enterprise is now valued at more than $13 billion and Tata-Corus will have a combined production of more than 23 million tonnes.

Currently, Arcelor-Mittal is the world's largest company in this space, followed by Japan's Nippon Steel and South Korea's Posco.

The Corus acquisition will also help Tata Steel to be a 40 million tonne per year entity by 2012.

CSN officials confirmed pulling out of the race to acquire Europe's second-largest steel firm after a final offer of 603 pence a share.

The Takeover Panel for the bidding - that was conducted in London - said in an e-mailed statement that Tata Steel had agreed to offer Corus investors 608 pence per share in cash (amounting to $11.3 billion).

"This auction procedure has now completed," the Panel said in an e-mailed statement.

Tata Steel also said in a statement that the Corus transaction to be completed by middle of March this year.

Corus shareholders will meet later on Wednesday to ratify the deal.

How the deal came through

According to the rules framed by the UK Takeover Panel, both the companies were supposed to quote at least five pence higher each time any of the two makes an offer.

The nine-round auction called by the UK Takeover Panel began at 2200 hrs (IST) (1630 hrs GMT) on Tuesday.

The Panel had made clear that if the auction stretched to the ninth round, the price could go beyond 600 pence per share, valuing Corus more than $11 billion.

At close of trading on London Stock Exchange on Tuesday, Corus shares rose to a seven-year high of 566.5 pence.

The auction started at 2200 hrs IST (1630 GMT) on Tuesday and stretched till early hours of Wednesday, followed by the announcement by the UK Takeover Panel shortly after.

Tata Steel was being advised by Deutsche Bank, ABN Amro and N M Rothschild & Sons, and legal advisors Herbert Smith.

CSN's advisors were Lazard and Goldman Sachs and law firm Macfarlanes.

On Tuesday, Tata Steel reported a 41 percent jump in net third-quarter profit to Rs 10.63 billion. Sterling, which has been nudging the $2 mark for several weeks, could get a boost from the deal as Tata Steel looks to buy pounds to pay Corus's British shareholders.

Steely resolve paid off

When Tata Steel decided to woo Corus, all was well, until CSN hopped into the ring and hinted at an offer for Corus at 475 pence a share.

On December 10, 2006, Tata punched back, raising its bid to 500 pps.

But the Brazilian steelmaker CSN refused to be silenced, dangling a 515 pence a share offer.

It was then that the UK Takeover panel stepped in and set a deadline till January 30 for the bidding.

Earlier on Tuesday, Tata's Board met to discuss strategy for the auction, besides approving the earnings for the October-December quarter.