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Tata moves

Analysts tracking

the development say that Tata, after having invested so much time and energy on the deal, is preparing to increase its bid, but to what extent would depend on the length CSN is willing to go for Corus.

Mumbai, Nov 21

A price war between Tata Steel and Brazilian steel-maker CSN appears to be on the cards for the takeover of Anglo-Dutch steel company Corus.

Reports from Bombay House, the corporate office of Tata Steel, and CSN headquarters indicate that both the rivals are in no mood to walk away from the deal at this stage, suggesting that they are preparing to enter into a long drawn battle by increasing their respective bids.

The situation arose after CSN came up with a 475 pence-a-share offer for Corus last week, trumping Tata's earlier offer of 455 pence-a-share.

Tata Steel, which has scheduled a board meeting on Thursday to take stock of the situation post CSN offer, is however not expected to make a move until CSN places a final bid on Corus's table. Also, the response of Corus to the CSN offer will be taken into account before Tata makes public its next move.

Analysts tracking the development say that Tata, after having invested so much time and energy on the deal, is preparing to increase its bid, but to what extent would depend on the length CSN is willing to go for Corus.

Reports in the British media indicated that CSN is prepared to further increase its bid for Corus control. A senior official of CSN was quoted in a British paper as saying that the company has been offered financing for much more than 100 per cent of the proposed purchase value, clearly sending signals that it was prepared to further increase its bid if Tata upped its 455 pence offer.

S&P rating

Standard & Poor's kept its `BBB' long-term corporate credit and senior unsecured bank loan ratings on Tata Steel on CreditWatch with negative implications, following CSN's counter-bid. "The size of the acquisition and the potential cash outflow that Tata Steel might experience from its existing or revised offer for Corus could have an adverse impact on its financial risk profile. A successful acquisition, however, can potentially improve the business risk profile of the merged entity," an S&P note said.

At the same time, it kept its `BB' long-term corporate rating on Corus on CreditWatch with developing implications, following CSN's counter-bid.

S&P has pointed out that the proposed new offer from CSN has "increased uncertainties over the potential outcome for Corus".

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Tatas to buy Corus for $8 b
`Tata Steel may not have to outbid CSN offer'
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(This article was published in the Business Line print edition dated November 22, 2006)
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