India wins Corus takeover battle

The terms were hailed as a “dream result” for shareholders, but unions called for urgent talks with Tata to discuss its investment strategy for Corus.

Tata’s move creates the world’s fifth largest steel group, capable of producing about 24 million tonnes of steel a year. It is also set to be the largest overseas acquisition by an Indian firm.

Corus has been looking to link up with a low-cost rival for more than a year, as rising raw material and energy costs chip away at profits.

It settled on a 455p a share deal with Tata in October, but the Indian firm’s hopes were scuppered in December when CSN tabled a higher offer.

CSN went into last night’s auction holding a recommended offer worth 515p a share, or £4.9 billion. But it fell by the wayside early today as the outcome of several rounds of bidding resulted in an offer of 608p a share from Tata, compared with 603p from CSN. Corus is valued at £6.7 billion when debt is included.

Corus chairman Jim Leng said today’s deal offered the best value for shareholders and the right future for Corus.

He added: “Tata and Corus are stronger together and will be able to compete effectively in an increasingly global environment.”

Last year, Corus was the ninth largest steel producer in the world with 18.2 million tonnes of output. It banked pre-tax profits of £580 million on turnover of £10.14 billion, although lower selling prices and higher costs hit operations in the first half of this year.

Corus, which was set up through the merger of British Steel and Dutch rival Hoogovens in 1999, employs 47,300 people worldwide including 24,000 in the UK at sites including Scunthorpe, Rotherham and Port Talbot. CSN and Tata had both said their takeovers would have no immediate impact on jobs.

Keith Hazlewood, national officer of the GMB union, said: “GMB is worried that our thousands of members will be expected to foot the bill for the takeover with their jobs.

“Hopefully, now that the uncertainty is over, we can have some stability and get on with making the company a success.”

Community, the trade union which represents steel workers, said it would be seeking urgent talks with Tata to discuss its investment strategy for Corus.

General secretary Michael Leahy said the Indian steel producer was inheriting a profitable, well-run company with some of the most efficient steel workers in the world.

“We are willing to work in partnership to drive forward an investment strategy which allows the UK operations to contribute further to the profitability of Tata.

“However, what we are not prepared to accept is the accelerated or slow demise of the UK steel industry. Tata should be under no illusions that we will resist any attempt to achieve this using all the resources at our disposal.

Last year Tata Steel, part of the Indian conglomerate Tata Group, was ranked 56th in the list of steel makers around the world with output of 5.3 million tonnes.

Tata Steel is part of a group which has operations in more than 54 countries across six continents. Tata’s steel arm was set up in 1907 and is now India’s biggest private sector steel firm.

The company claims to be among the lowest-cost steel makers in the world and its products are targeted at the automotive and construction industries.

The proposed deal, which still needs to be backed by shareholders, resulted in the Corus share price rising by another 7%, or 41p, to 604p. The stock was at 200p less than two years ago.

Martin Slaney, head of spread betting at GFT Global Markets, said: “This is obviously a dream result for Corus shareholders. There is no reason why this offer should not be accepted.

“The consensus view seems to be that Tata have probably overpaid, but if further consolidation in this sector occurs going forward then this will look like very fair value to create the world’s fifth-largest steel maker.”