Tata Steel is set to revise its offer for the Corus group that will exceed Brazil's Companhia Siderurgica Nacional's takeover bid of £4.75 a share for the Anglo-Dutch steelmaker.
Brazil's fourth-largest steelmaker late tonight said it had approached the Corus board with a formal bid 20 pence a share higher than Tata Steel's offer. While Tata Steel's bid amounted to $8.1 billion, the CSN offer values Corus at $8.4 billion.
CSN's offer is, however, subject to completion of due diligence, which Tata Steel has already done.
Though Tata Steel refused to comment on its future move, sources close to the development said the company might come out with an improved offer next week. "Tata Steel had already factored in a possible counter-bid," said an investment banker.
Industry sources said the battle for Corus could go down to the wires with Russian steel major Severstal also planning to enter the fray.
CSN said it would finance the acquisition through a combination of internal accruals and debt. It has appointed investment bank Lazard to advise it on the bid.
The Corus share price stayed ahead of the offers, rising 4.9 per cent to 496-1/4 pence today while the Tata Steel stock ended 1. 2 per cent lower at Rs 475.95 on the Bombay Stock Exchange.
Tata Steel will now face a crucial test at the extraordinary general meeting on December 4, when the Corus board will place the Tata offer before its shareholders. The company will require the support of half the shareholders present at the meeting and 75 per cent of the total shares.
While Corus shareholders AllianceBernstein LP, Barclays Plc and Jupiter Asset Management have diluted their stakes in the last one month, it is not known whether Standard Life Plc, the biggest shareholder with a 7.5 per cent stake, has reduced its holding. Standard Life had said the Tata bid undervalued Corus.
A Standard Life spokesperson told Business Standard, "The CSN bid is not surprising to us. Let us see how things shape up." CSN holds a 3.8 per cent stake in Corus.
"A combination of CSN and Corus will create a global powerhouse with market leading positions and exceptional distribution networks across both developed and emerging markets," CSN Chief Executive Benjamin Steinbruch said in a statement.
Corus had agreed to Tata's offer after spending a year looking for a strategic partner in Brazil. It had also approached CSN.
