Corus investors say Tata bid is too low

Shareholders in Corus, including its largest investor, Standard Life, have accused the company's management of selling out too cheaply after it agreed a £4.3bn takeover by its smaller Indian rival Tata Steel.

Corus has met with numerous companies over the past year to consider ways to increase its presence outside Europe through a merger or partnership. After meeting with companies in Russia and Latin America, the Anglo-Dutch steel producer announced the Tata deal yesterday - talks began last November.

Philippe Varin, Corus's chief executive, said: "This offer comes at the right time. It is the right offer with the right partner."

Ratan Tata, the head of Tata Steel, who is to be the non-executive chairman of the combined group, said: "The deal reflects fair value and we hold to that view."

Corus shareholders proved to be less impressed with the 455p cash offer. A spokesman for Standard Life Investments 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. The trading performance of Corus has been very strong and produced very attractive cash flows, which we believe could be worth more than the current price being offered by Tata."

Standard Life, which owns 7.9 per cent of Corus shares, said the offer does not fully reflect the value of the company's position in a consolidating market. It also argued that the quality of the steel company's earnings is likely to improve due to less volatile market conditions and that the synergy benefits of the merger are not factored into the bid.

Herve Mangin, a fund manager with Axa European Opportunities Fund, said that Tata's bid multiple was at least 10 per cent below average recent deals in the sector. Axa is a top-10 Corus shareholder with a 2.9 per cent stake. "I think that Tata's bid is too low and that some other players like Severstal and CSN could react. Corus is the only sizeable asset in Western Europe that can be bought," he said.

Neither shareholder committed to voting against the merger, however. Unless a higher offer does emerge, Tata's bid remains the only offer on the table. A source familiar with the situation said he expects companies such as Russia's Severstal, which has yet to rule out a bid, and Brazil's CSM to take a second look. The source said that given Tata's deal has been made in cash and a rival would have to pay a substantial premium, a competing bid appears improbable. "There is nowhere else in the world that this sort of asset is available, but picking it up on the cheap is no longer an option. It is highly unlikely that anyone [else] will come up with an all-cash bid."

Standard Life's David Cumming has previously said that Corus shares could potentially be worth as much as 600p a share if a bidding war emerges. The shares fell 1 per cent to 473.5p after the deal was announced, remaining above the offer price.

The merger needs to be approved by more than 50 per cent of shareholders and Corus has agreed to pay an inducement fee of 1 per cent of the value of the deal if the merger collapses. Tata has agreed to pump £126m into Corus's pension funds and also pledged to increase the employer contribution rate from 10 to 12 per cent.

The merger represents the second mega-deal in the global steel sector this year after Mittal Steel's $31bn (£16.5bn) takeover of Arcelor. European steel companies are under pressure to cut costs due to an influx of steel from emerging markets, such as China. The deal will combine the European company's leading-edge manufacturing techniques with Tata's low-cost slab steel.

The transaction is the largest ever made by an Indian company and will create the world's fifth-largest steel producer.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Ramsay Bolton in Game of Thrones
tvSeries 5, Episode 3 review
News
peoplePair enliven the Emirates bore-draw
News
British theoretical physicist Stephen Hawking
people
News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence