The story is not yet over. The Corus takeover story has more drama in it than we ever expected. First, the Tata Steel bid to takeover Corus, which the board agreed for a sum of $8.1 billion. The deal is not complete yet as it is awaiting the go ahead by the shareholders.
Brazilian steel giant Companhia Sider’rgica Nacional or CSN showed earlier interest in Corus. After the Corus board agreed to the Tata offer, there were whispers that Tata-Corus could now jointly bid for CSN in a classic case of the hunter being hunted. Now, that does not seem to be an immediate possibility as CSN has made a higher offer for Corus at $8.2 billion.
Tata Steel however has reserved the right to return with a higher bid for Corus. Tata Steel initially came close to make an offer of $9.3 billion for Corus acquirement that it lowered significantly by over $1 billion. I guess it will not be too hard for Tata’s to up the stakes higher in this game, which is getting more and more interesting.
News: Moneycontrol.com
Comments
It will take 12-18 months for this dram to unfold. Untill then the shareholders will have to suffer.
Given the amount of debt for corus acquisition and colling of steel pricess globally due to excess suplly from china, i don’t see any immediate benefits to tata shareholders. However it is windfall for corus shareholders. As a next logical step, if combines tata and corus bids on CSN, that would jeopardise shareholders furthermore if steel prices fall and don’t go up for another 2-3 years.
I have refrained from buying the tata steel stock.
Sridhar:
I can see no real benefits for Tata with Corus acquisation. There are fundamental differences in the way the two companies run their business. Where Tata looks for cost reduction Corus looks for maximum benefits. The common ground of agreement between the two companies are far from each other’s comfort zones.
As far as a joint bid for CSN by Corus and Tata is concerned (subject to Corus goes to Tata), I guess the trend is to create behemoths in the steel industry these days. I cannot see steel prices falling in the next 2-3 years.