War for Corus: Beat them or join them

London: The battle for Anglo-Dutch steel giant Corus continues but can the Tata Steel and CSN afford to escalate the bidding war? Analysts now say that the best way is ‘If you can’t beat them join them’.

With the bidding war for Corus between Tata Steel and CSN set to escalate further, analysts are now proposing a new strategy. They say a three-way merger between the companies might make them a much more formidable rival to Arcelor Mittal.

Steel Business Briefing Managing Director Patrick Flockhart said: “I think a threesome would make quite good sense, i.e. a threesome between CSN, Tata and Corus. Both CSN and Tata are both of a similar size, they are both good quality producers and low cost in developing countries, and therefore if they were to combine together and with Corus, that would make a force that would be quite strong."

But of course the question arises whether such a merger is at all possible.

Caparo Group Chairman Lord Swraj Paul said: "It's both desirable and possible. It's really a question, look at the strength of all three companies, and consolidation is still going on, Mittal did that, and still with all these three consolidations, they will still be much smaller than Mittal, so it is certainly desirable but it's really a question for all those interested parties to decide whether it can be done."

But analysts say that what, stands in the way of a three-way merger is less than steel – or more, depending on how you look at it.

"The only thing that comes in the way is personalities and ambitions. You know would Tata agree to merge with CSN and of course would CSN agree to merge with Tata. CSN is led by a very ambitious gentleman, would he consider a situation where he might not be the lead player in a new company. May be not. But certainly it would seem to me to be worth considering," Flockhart added.

What if the bride were to go for both suitors. Threesomes are not uncommon in the world of steel. Arcelor and then Mittal came along. This kind of union could be desirable – but it's not going to be easy.

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