Severstal asks Sykes to aid in its London flotation

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The Independent Online

Severstal, the Russian steel group, will this week begin the marketing of its $15bn (£8bn) London flotation and it has approached Sir Richard Sykes, the former chief executive of GlaxoSmithKline, to chair the business.

The Russian company needs "credible Anglo-Saxon" figures to join its board to reassure western institutional investors. Sir Richard, who is the rector of Imperial College London, has held discussions with Severstal about taking on the non-executive chairman position. The 64-year-old is said to find the prospect "intriguing" but it is understood that Severstal is also speaking to others about filling the role.

Severstal will begin the roadshow for its London listing today. Investment banks UBS, Deutsche and Citigroup are working on the offering, which will value the company at anywhere between $10bn to $20bn.

The Russian group, which lost out earlier this year in the bidding for Arcelor, is reckoned to be one of the companies that could intervene to break up the agreed £4.3bn takeover of Anglo-Dutch steel producer Corus by India's Tata Steel. Severstal has ambitious international expansion plans but it refused to comment on Corus yesterday.

Separately it emerged that another overseas operator, Brazil's CSN, had hired adviser Lazards to study the possibility of trumping Tata's offer for Corus. The Brazilian group held merger talks with Corus back in 2002. Standard Life, the Anglo-Dutch company's biggest shareholder, has publicly stated that the Tata bid undervalues the company. The CSN development came as another possible Corus buyer, Germany's ThyssenKrupp, ruled itself out of the running.

Analysts said Corus agreed to Tata's offer only after spending a year looking for a strategic partner in Brazil, Russia and India, so the possibility of a tie-up with the likes of CSN or Severstal had already been explored.

A counter-bidder would need to better Tata's agreed 455p-a-share offer by a clear margin. Tata also has financing in place, as well as a £43m break fee.

In addition, any counter-bidder would need to at least match the deal on pensions that Tata has agreed with the trustees of the Corus pension fund. This comprises an additional £126m immediate cash payment into the pension fund - worth 13p extra per share - and an increase in the contribution rate.

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