News Guardian
Anglo-Dutch steel-maker Corus this morning accepted terms of a £4.3bn (USD 8bn) takeover from India's Tata Steel in a deal that will create the world's fifth-largest steel-maker.
The formal announcement of the 455p a share terms today could unleash a bidding war for Corus, say some City analysts.
Corus shares touched 500p earlier this week on speculation that rival bidders are poised to top the Tata terms.
The terms have not impressed Standard Life Investments, Corus's biggest institutional shareholder with a 7.9% stake.
In a statement this afternoon, it said: "The 455p per share offer by Tata for Corus is lower than we would have expected the board of Corus to agree to and recommend."
It added that the Corus management team had done "an excellent job" in restructuring the group.
The statement continued: "The global steel business is undergoing a period of rapid consolidation, which leaves Corus in an interesting strategic position within the industry. We feel that the offer price does not fully reflect the value of that position.
"The acquisition of Corus brings many advantages to Tata, including elevating it into the top five of global steel producers and an as yet unquantified amount of synergy benefits.
"The 455p per share offer from Tata does not attribute significant value to Corus shareholders from achieving what we understand to be the substantial savings available from the joining of the two businesses."
By 1.30pm, however, the share price was down 4.5p as hopes of a rival offer were knocked following Corus chairman Jim Leng's revelation that the group had already held talks "with a number of parties from Brazil, Russia and India."
But, at 474p, Corus shares remain comfortably above Tata's offer terms. Potential buyers could include the Russian steel-makers, Novolipetsk and Severstal, the steel giant controlled by Alexei Mordashov, as well as the Brazilian steel group Companhia Siderurgica Nacional.
Corus and Tata said this morning the combination of their companies was "strategically compelling, creating a vertically integrated global steel group" with crude steel production of 23.5m tonnes in 2005.
Mr Leng said the offer reflected the "substantial value" created for Corus shareholders.
"In the middle of last year, my board agreed a strategic way forward for Corus to seek access to low cost production and high growth markets. Consistent with this, the Company held talks with a number of parties from Brazil, Russia and India. This transaction represents the culmination of these talks.
"This combination with Tata, for Corus shareholders and employees alike, represents the right partner at the right time at the right price and on the right terms. This creates a well balanced company, strategically well placed to compete in an increasingly competitive global environment."
For Tata, chairman Ratan Tata said: "This proposed acquisition represents a defining moment for Tata Steel and is entirely consistent with our strategy of growth through international expansion.
"Corus and Tata Steel are companies with long, proud histories. We have compatible cultures of commitment to stakeholders and complementary strengths in technology, efficiency, product mix and geographical spread.
"Together we will be even better equipped to remain at the leading edge of the fast changing steel industry."
Tata has said it has held "constructive and satisfactory" talks with Corus's two main UK pension schemes and has offered to fund the deficit by paying £126m into the scheme and to increase the contribution rate on the British Steel Pension Scheme from 10% to 12% until March 31 2009.
The Indian steel-maker later said there were "no short-term plans for any relocation of plants," but declined to be drawn on possible job losses at Corus.