Tatas pick up Corus shares worth $2.3 b

MUMBAI/LONDON: A day after securing the $12.1-billion deal with Corus, Tata Steel is now making sure it is not caught off-guard again a la CSN. Its wholly owned special purpose vehicle, Tata Steel UK, has acquired almost 200 million shares, or 21.1% stake, in Corus for $2.3 billion.

���It serves Tata Steel���s purpose as it is still technically possible, though unlikely, for another bid to come. Now they want to consolidate their position in Corus,��� said sources close to the development. However, a company spokesperson termed the development as ���a regular thing. Corus��� shareholders can tender their shares and the buying of shares can be done over the next six months,��� he said.

After winning the nine-round duel with Companhia Siderurgica Nacional on Wednesday, Tata Steel had indicated it would acquire shares from the market at 608 pence per share in cash. Agencies reported that Tata Steel had asked all Corus shareholders wishing to sell their shares to contact its advisors ABN Amro and Deutsche Bank.

However, sources added that the company: ���doesn���t want to leave anything to chance, especially when its offer is yet to get the nod from Corus shareholders���. Standard Life, the largest stakeholder in Corus, sold its entire 7% stake on Wednesday and UBS, which was one of CSN���s bankers, is also believed to have partly sold its equity holding.

It may be recalled that CSN, in a surprise move, had announced its intention to acquire Corus after the Anglo-Dutch company���s board had recommended Tata Steel���s 455 pence offer to shareholders in October 2006. The consequent race ended with Tata Steel having to increase its stake by 36% to 608 pence.

Tata Steel will need to send a final note to Corus shareholders on details of the funding, sources added. Then, Corus will call an extraordinary general meeting of its shareholders where the 608 pence offer will be put to vote, but only after the bid has been cleared by the Court. Tata Steel and Corus are expected to announce a revised scheme of arrangement by next week.

Meanwhile, the company is still working out the nuances of the funding structure of the acquisition. Tata Steel���s VP-finance Koushik Chatterjee has joined his treasury team in the British capital to chalk out the details.

Sources said: ���Raising $12 billion within a short time is a challenge as funds of this scale has never been raised by a company in India. We are working out the details.��� The company is believed to be contemplating a GDR issue to reduce its consolidated debt equity burden, a British daily reported on Thursday. The size of the issue is not known.

The company has indicated that 47% of the $12 billion will come in the form of equity contribution from Tata Steel and the rest through debts. In an interview to a private TV channel, Standard Chartered group chief executive Peter Sands said that his bank���s contribution could be in the region of $3 billion. However, he didn���t elaborate further.


Tata Steel���s stock remained under pressure at the BSE, going down by 1.3% to Rs 457.7 on Wednesday. The metal index was up 1.6%. Corus shares were up 0.08% at 602 pence at 18.30 IST.

Meanwhile, British media quoted trade union leaders seeking ���urgent talks with Tata to discuss the investment strategy for Corus.��� ���What we are not prepared to accept is the accelerated or slow demise of the UK steel industry.

Tata should be under no illusions that we will resist any attempt to achieve this using all the resources at our disposal,��� reports quoted Michael Leahy, general secretary of Community, the trade union representing steel workers, as saying. There have been fears of job losses ever since, with many expecting Tata Steel to ship cheaper slabs from India and scale down operations in the UK.