Corus opens door to £4.3bn Brazilian bid

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The Independent Online

Corus opened its books to Brazil's CSN over the weekend as financial advisers to the two steel companies began detailed talks about a planned £4.3bn takeover offer for the Anglo-Dutch group.

The Brazilians also look set to make a pitch to Corus that their offer will provide better security for jobs at the company than the competing 455p-a-share cash offer from India's Tata Steel that has already been recommended by the Corus board.

It was announced on Friday that CSN had made a last-minute approach to Corus about a potential 475p-a-share cash offer. As well as offering more money than Tata, one powerful attraction to the CSN rival offer could be its access to a cheap and plentiful supply of iron ore, the key raw material for steel-making. This, CSN will argue, would help protect jobs at Corus plants in the UK and the Netherlands.

Tata is not allowed to export iron ore to Corus, under India's regulations. By contrast, CSN will pledge immediate access to high-quality iron ore from its own massive mine near Sao Paulo to Corus plants. The Brazilian company is self-sufficient in iron ore.

Over the weekend, Corus's advisers CSFB and CSN's advisers' Lazards held talks. Corus is providing the Brazilians with all the necessary information for them to conduct due diligence. As yet, the CSN interest is conditional. As well as insisting on a clean offer for its shares, Corus will seek assurances that the Brazilian company can match Tata's commitments to safeguard the massive pension scheme at Corus, which has liabilities of £13bn.

The Tata offer will be put to Corus shareholders at a special meeting on 4 December.

The Brazilians have about £4bn in debt financing lined up from Goldman Sachs, BNP Paribas and Barclays. The rest will come as equity from CSN.

Corus and CSN held aborted merger discussions in 2002. More recently the Anglo-British company has spent the last year trying to sell itself to a company from an emerging market and its management toured Brazil, Russia and India to find a buyer. Only Tata came forward as part of that process. If CSN had moved 12 months ago, it could have secured Corus for around 300p a share, analysts said. Even at 455p, a number of steel companies had suggested that Tata was overpaying for Corus.

Tata will now wait to see if CSN puts a firm offer on the table before deciding whether to enter into a bidding war for Corus.

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