LONDON, 1 February 2007 — Tata Steel of India bought Anglo-Dutch producer Corus yesterday for $13.7 billion, beating Brazilian rival CSN in an auction that highlighted the growing global clout of emerging market companies.
The auction pitted steel titans from Brazil and India — both emerging economic superpowers — against each other for a valuable part of the historic European steel industry.
Tata’s knockout bid, equivalent to 7.0 billion pounds or 10.6 billion euros and including debt, convinced Corus management, who recommended that shareholders back the deal. Tata Steel welcomed the board’s backing.
Corporate India now looms large in the global steel sector, especially after Mittal Steel, led by Indian tycoon Lakshmi Mittal, forged a $32.4 billion blockbuster deal to create market leader Arcelor Mittal last year.
Tata’s offer of 608 pence per share beat Companhia Siderurgica Nacional’s 603 pence per share bid in a quick-fire auction that was imposed by Britain’s Takeover Panel.
“The final offer of 608 pence from Tata is the culmination of a thorough process conducted by my board to secure both the best value for shareholders and the right strategic future for Corus,” said Corus Chairman Jim Leng.
“Tata and Corus are stronger together and will be able to compete effectively in an increasingly global environment. This combination creates a strong and robust platform for growth that will benefit all stakeholders.”
In a separate announcement, Tata Steel welcomed the backing from Corus management. “Following the conclusion of the auction process, the revised terms of the acquisition deliver substantial additional value to Corus shareholders,” Tata Steel Chairman Ratan Tata added in a statement. “At the same time, Tata Steel gains a significant platform to generate additional value.”
He added that the company was “convinced” of the “compelling strategic rationale” behind the combination of Corus and Tata.
Meanwhile, Corus Chief Executive Philippe Varin ruled out job cuts in Britain following the deal. Speaking to reporters, he said there were no intentions to shed jobs at the company’s main sites in Port Talbot, Scunthorpe and Rotherham. Varin added that the takeover was in the “best long term interests” for employees.
If completed, the deal will create the fifth-largest steel player in the world with annual steel output of around 25 million tons and 87,000 employees, according to the companies.
Figures from the end of 2005 compiled by the International Iron and Steel Institute put Tata and Corus combined annual output at 22.6 million tons and list it as the world’s sixth leading producer. Tata Steel, part of the huge Tata conglomerate, has previously stated that its Corus takeover plans would create a high-quality, low-cost, attractive growth platform in Asia combined with a leading European steel player.
Corus shareholders are expected to vote on the Tata takeover in three to four weeks, a Corus spokeswoman said.
Tata’s Ratan Tata, speaking in Mumbai earlier yesterday, called the bid a “visionary” step for India, but shares in Tata Steel slumped amid fears the company was overpaying.
