4 billion to create a new global steel giant

Three months after the successful OPA of the francoluxembourgeois Mittal Arcelor, Corus is poised to turn to join the fold of an Indian group. The steelmaker anglo-néerlandais agreed Friday, the redemption offer made by Tata Steel. The latter is ready to pay 4.3 billion pounds (6.4 billion) to create a new global steel giant. If it materializes, this operation would be the largest acquisition ever by an Indian group abroad. However, it does not raise the enthusiasm of the financial community. The proposed price, 455 pence per share, is considered very insufficient by the City. Standard Life, the first shareholder of Corus with 7.9 of the capital, immediately sounded the charge, holding that this offer did not "sufficient value" business the expected synergies and cleared risk-taking. One of the leaders of the British Fund Manager had mentioned, there is little expectations around 600 pence per share. Friday, despite a downturn, the title of the steelmaker closed to 478,50 pence, significantly above the proposed 455 pence.

The reaction of investors contrasts with the satisfaction displayed by the leaders of the European steelmaker. "It's the right offer at the right time, with the right partner," provides Philippe Varin, its Director General. In July 2005, the Board of Directors of the Group had found untenable to term his position of this producer in Europe, in a market in rapid consolidation. The following fall, the leaders of Corus went to Mumbai to meet with the management of Tata Steel. "Over the exchanges, it became increasingly clear that a merger was the best way." "It has been recommended unanimously by the Council", tells the President of the group, James Leng.

"Significant" synergies

Made price represents a premium of 26 from the average of stock prices over the last twelve months. In addition to the cash offer, Tata Steel is committed to refinance the debt of Corus in the amount of EUR 1.2 billion. He also plans to pay 126 million pounds (188 million euros) to the pension fund Corus Engineering, and increase the contribution of the employer to the Pension Fund of 10-12 British Steel to March 2009.

If he goes to his term, friendly reconciliation will give birth to the fifth steel producer world, with a production of 23.5 million tonnes in 2005, 5.5 million from Tata Steel. Knowing that development projects launched by the firm in India should be producing around 40 million tonnes. "This new entity has the potential to continue the consolidation of the steel industry," welcomed b. Muthuraman, the Director-General of Tata Steel. As a first step, Corus will keep its name and its legal existence, with a Board of directors chaired by Ratan Tata, the Patriarch of the Indian group. Three leaders of Corus will come to the Board of Tata Steel. The purchaser expects synergies "significant" and "fast". To cost savings, both at the level of production and logistics, will add a "strong but difficult to quantify potential", according to Philippe Varin, commercial synergies.

If a vote of 75 of the General Assembly of Corus is required to move forward, the group chaired by Ratan Tata has set as a condition for the maintenance of its offer obtain 50 of the shares of the target.

In the meantime, outbidding is of course possible. In Russia, Severstal was able to complete its merger with Arcelor, but always seeks the means to grow. For its part, the German ThyssenKrupp denied information published yesterday by the "Sunday Times" that he planned to launch a counteroffer on Corus. The British weekly also referred to the interest of the Brazilian CSN, which would have mandated a Bank of affairs on this issue.