Corus shares rose further above the value of an indicative offer from India's Tata Steel, as yesterday investors bet that another bid will emerge.
Attention focused most on the Brazilian steel maker Companhia Siderurgica Nacional (CSN) but some believe that a Russian contender could also emerge.
On Tuesday, the Anglo-Dutch company Corus announced that it had received an indicative offer from Tata worth 455p a share, or £4.1bn. The statement from Corus made clear that it was minded to recommend that deal if it is formally put on the table - Tata is believed to be just days away from doing just that.
Corus shares closed up 8p yesterday at 487p on speculation that another bidder offering some 500p a share will come forward.
A report in an industry journal suggested that CSN is "waiting in the wings" to launch a bid for Corus. Traders pointed to the fact that Corus and CSN have previously been in merger talks, which were called off in 2002. The two companies were partners in a Portuguese steel-making joint venture until May this year when Corus said it would sell its 50 per cent stake to the Brazilian company.
A spokesman for CSN was dismissive of the report, describing it as "just market rumour". Traders also pointed to Russian operators breaking up the Corus-Tata deal, in particular Severstal and Novolipetsk, which have not ruled out launching counter bids for the Anglo-Dutch company.
The price being offer by Tata and Corus's recent history both pointed against a bidding war breaking out, analysts said. Tata would be paying 6.6 times the underlying forecast earnings for Corus this year, a multiple above that paid earlier this year by Mittal for Arcelor. And talk about a Russian bid for Corus has circulated for several months already, without anything firm emerging.
Luc Pez, an analyst at SG Securities, said: "We would be surprised to see a bidding war for Corus. Tata Steel seems the most credible suitor ... Assuming aggressive synergies gains makes it hard to reconcile with an above-500p price tag."
Global steelmakers are under pressure to cut costs and become more competitive as China switches from being a net importer to exporter of steel. For a steel-maker in Asia or South America, Corus offers bidders advanced finished products and access to a European customer base.
Separately, an independent pensions expert warned about Corus's vast pension costs and high equity exposure. John Ralfe, a pension consultant and former corporate finance chief of the retailer Boots, said: "Tata think they are buying a steel company but Corus is a hedge fund with a few steelmaking plants on the side."
Mr Ralfe said trustees of the Corus pension schemes should look hard at Tata's financial strength and commitment to sponsoring retirement funds, particularly as Indian-based buyers fall outside the regulatory reach of the European Union.