Tata Steel is banking on the pension trustees of Corus, the steelmaker it is trying to buy, blocking this week's expected higher bid from rival Brazilian firm CSN.
CSN will hold a crunch meeting mid-week with the Anglo-Dutch company's trustees to provide more details about its bid. The Brazilians must table a bid before 4 December, when Corus shareholders vote on whether to accept Tata Steel's existing £4.3bn offer.
It is believed that CSN has had only preliminary discussions with the trustees. The wardens of the pension fund could potentially block the CSN bid if they are not happy with the Brazilian firm's commitments to pay workers' pensions. Corus, which includes the former British Steel, has three pension schemes with about £10bn of assets to cover payments for its 47,000-strong existing workforce and many more retired workers.
Tata Steel has already made a 455p per share offer for Corus, which has been recommended by the company's board. The pension trustees have given their blessing to Tata Steel's commitment to plug a £126m deficit in one of the schemes and to increase pension contributions.
CSN, which a fortnight ago said it had made a proposal to buy Corus for 475p per share, says it will match Tata Steel's pension commitments.
But the pension trustees have not yet been given these details. They could be concerned about CSN's proposed offer, which uses more debt than the bid from Tata Steel.
The controlling shareholder of CSN - Vicunha - also has no assets other than the CSN stake. In contrast, Tata Steel's largest shareholder, Tata Sons, has assets worth billions of pounds. If a company goes into administration, the parent could be called upon by the regulator to honour pension commitments.
The Corus auction is expected to test new rules introduced to protect workers' pensions, which are open to interpretation.