Pension trustees to go with Tata bid for Corus
Anglo-Dutch company Corus faces a ‘much brighter future’ after the agreed £4.1-bn takeover bid from Tata Steel, said a report on Sunday even as the Brazilian steel group CSN appointed investment bank Lazard to advise on options for challenging the...
By Agencies |
LONDON: Anglo-Dutch company Corus faces a ‘much brighter future’ after the agreed £4.1-bn takeover bid from Tata Steel, said a report on Sunday even as the Brazilian steel group CSN appointed investment bank Lazard to advise on options for challenging the bid.
Also circling is Thyssen Krupp, the German steel giant, which has a market value of £9.4bn. Severstal, the Russian steel group tipped last week as a predator, is thought to be less likely to intervene because it is busy with its flotation in London.
According to a report in The Sunday Times, Tatas are almost certain to withdraw if a bidding war develops. The company is offering 455 pence a share for Corus. Once Corus’ debt is included, the deal will be worth £5.1bn.
Any rival bid will face a tough obstacle from Corus’ pension trustees. Trustees of the two main Corus schemes, which have assets and future liabilities of £13bn, more than twice the value of the company, have agreed to back Tatas’ bid, the report said.
The size of the liabilities means the pension’s regulator could stop any takeover unless the bidder guaranteed the future of the pension funds, or had trustees’ backing. Their support was only won by Tatas after weeks of negotiations between Corus’ management and Tatas’ financial advisers, the investment banks ABN Amro and Deutsche.
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Tata has agreed not only to make up for the £126-m deficit in the smaller scheme but also increase the company’s rate of contributions to the larger one for three years. Corus executives said the first commitment alone was worth 13 pence per Corus share. A banker close to the negotiations said the agreement with the trustees was ‘a bit like a poison pill’. Corus executives said the trustees might be happier striking a deal with Tatas, which has a reputation of a benevolent employer.
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