Corus shares rise on talk of Abramovich stake

Shares in Corus rose yesterday on speculation that the Russian tycoon and Chelsea football club owner Roman Abramovich is poised to take a stake in the Anglo-Dutch steel group.

The move could lead to a merger or partnership between Corus and the Russian steel producer Evraz. Mr Abramovich has admitted he is negotiating to take a 40 per cent interest. Russia's richest man is a favourite with the Kremlin. There are suggestions the "oligarch" is being lined up by the Putin administration to create a Russian steel champion.

A Corus-Evraz tie-up would make sense strategically for both sides. The steel industry is in the midst of a consolidation frenzy, centred on a battle for control for Luxembourg-based Arcelor, which means smaller players such as Corus and Evraz feel more threatened. Corus has said it is seeking a partner from outside western Europe that could give it access to lower-cost production and raw materials.

The company has singled out India, Brazil and Russia as countries of interest. Evraz has its own sources of coking coal and iron ore, the two major materials needed to produce steel.

Evraz, for its part, is seeking better access to the lucrative European Union market. It has already made acquisitions in Italy and the Czech Republic.

It is understood Corus and Evraz have held informal merger negotiations in the past but these have not made progress.

Russia's Kommersant newspaper said Mr Abramovich has been in talks for two weeks with Corus with a view to taking a non-controlling share in the company. It said he began talking to Evraz and Corus at about the same time and that a deal could involve swapping a stake in Evraz for one in Corus.

Mr Abramovich and his business partners are known to have been hungry for investment opportunities in Russia and the West for some time. Millhouse, the billionaire's investment vehicle, made £7bn last year when it sold its controlling stake in the oil company Sibneft to the Kremlin-controlled Gazprom. It was already sitting on serious cash reserves from the sale of a 50 per cent stake in Rusal, Russia's biggest aluminium producer.

It has been widely speculated that Mr Abramovich was keen to exit the Russian business world due to excessive political risk and sink some of his billions into more stable Western enterprises. Corus fits that profile and has attracted Russian investors, notably Alisher Usmanov who tried and failed to get a seat on the board, and the aluminium tycoon Oleg Deripaska.

Mr Abramovich is on good terms with both men and is known to have been in business talks with Mr Usmanov in the last month.

Corus shares closed up 7.25p at 398p, valuing the company at £3.6bn.