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LONDON - India's Tata Steel is set to become the world's fifth-biggest steelmaker after winning a bid battle for Anglo-Dutch steelmaker Corus Group by agreeing to pay £5.75 billion ($16.39 billion).
Britain's Takeover Panel said in an email that after an auction, Tata Steel had agreed to offer Corus investors £6.08 per share in cash, topping a final bid of £6.03 from Brazilian Companhia Siderurgica Nacional (CSN).
Both offers were right at the top end of what analysts had thought possible and will now be put to Corus investors.
The auction process, following a takeover tussle that began when Tata Steel offered £4.55 per share on October 20, started at the close of trading in London on Tuesday when Corus shares ended 0.5 per cent higher at £5.63.
CSN and Tata Steel were keen to buy Corus to become significant players in the consolidating steel industry, where Dutch-based Mittal Steel last year bought Luxembourg's Arcelor to create the world's biggest steelmaker, Arcelor Mittal.
The Tata offer values Corus at around seven times its forecast earnings before interest, tax, depreciation and amortisation (ebitda) for 2006, well above the multiple Mittal Steel paid for Arcelor which was 4.6 times historic ebitda.
Before the auction, CSN had the upper hand after its bid, worth £4.9 billion or £5.15 per share, was accepted by Corus on December 11, hours after accepting Tata Steel's £5 offer.
The battle pushed Corus' share price to seven-year highs and pitted Tata group chairman Ratan Tata, 70, from one of India's best-known business families, against CSN's main owner and boss Benjamin Steinbruch, 52, one of Brazil's most well-known executives.
Ratan Tata has transformed the once-staid Tata group since taking over as chairman in 1991. He has cut the number of companies in the group from over 300, and acquired new businesses with growth potential.
Tata Steel has spent more than US$400 million ($581 million) in recent years to buy Singapore's NatSteel and Thailand's Millennium Steel, and other companies in the group have also made acquisitions outside India.
CSN's £6.03 offer marks the second time in five years it has failed to buy Corus. In 2002, CSN held talks with Corus about a tie-up but backed off because of concerns about the European company's financial health.
Steinbruch bid for Corus last year after losing to Chicago-based Esmark in a showdown for US steelmaker Wheeling-Pittsburgh.
On Tuesday, Tata Steel reported a 41 per cent jump in net third-quarter profit to 10.63 billion Indian rupees ($3.5 million).
Sterling, which has been nudging the US$2 mark for weeks, may get a boost as Tata Steel looks to buy pounds to pay Corus' British shareholders.
- REUTERS
