Media bytes

UK Media Responses

Politicians and unions cautiously welcomed the tie-up which would create a new global powerhouse but they also called on Corus to demand tough conditions to safeguard wages and pensions. There has been speculation that Severstal, the Russian steelmaker, which is about to float on the London stock market, could also bid for Corus and most experts believe Tata will need to raise its offer to win a recommendation from the UK company’s board.

John Quigley, editor of Steelweek, said the deal made sense for both companies, giving Tata access to western markets and Corus a source of low-cost steel. “I can’t see anyone who would have as much to offer Corus as Tata,” he said

Guardian
October 18

Tata’s offer is pricey, more expensive in multiples of future earnings than the exit valuation of Arcelor. Corus cannot boast the best margins in the business. And the offer is cash — another bidder may yet materialise, but the question is whether a rival offer would come in the form of ready money or some combination of cash and equity with an uncertain valuation. Nevertheless, the Dutch (and British) workforce should not be fooled. There is painful restructuring in store.

The Times
October 20

The Transport and General Workers Union reacted with caution to the deal. John Rowse, T&G national secretary for manufacturing, said, “We want to know what the deal means for our members’ jobs in the manufacturing side of Corus as well as all the former workers whose pensions are also very much on our mind. The assurances on jobs look very brittle.”

The Independent
October 20

The deal was announced on October 20, with the two firms pledging to complete by January, leaving time for a possible-though some say unlikely-rival bid for Corus to emerge. For Tata it represents a significant triumph in a fragmented industry that is fast consolidating. The expansion of Tata is also a reflection of a rapid growth in confidence among Indian firms. This deal is by far the largest foreign purchase ever made by an Indian company.

The Economist
October 20

Rapid economic growth in developing countries including China and India is creating huge demand for steel and many firms are looking to add to their steel-making assets. But as Chinese steel production soars, other manufacturers are trying to consolidate so they can cut costs and stay competitive. Earlier this year Mittal Steel bought rival Arcelor for $34bn, creating the world’s biggest steel maker. Analysts broadly welcomed the deal, but warned that there were risks.
BBC website
October 9

For Corus, to be acquired by Tata would mean the end of the road for any ideas of remaining independent in a global steel industry where the balance of power has swung firmly towards Asia — a region with much lower steelmaking costs than Europe and the US and where demand for steel products is also much higher. The Tata deal is extra ordinary in its size but most analysts believe it is only the first of what will be larger Indian outbound takeovers.
Financial Times
October 18