Counter-bid for Corus unlikely

The possibility of a bid to counter Tata Steel's bid to acquire Corus looks remote now, with a sharp reduction in the Anglo-Dutch steel company's share price and diluition of stake by its main shareholders.

Shares of London-based Corus have lost 2.7 per cent since October 20, the day when the Tata bid was accepted by the Corus board, to 465.75 pence, reflecting the absence of any counter-offer. Tata Steel had offered 455 pence a share to the Corus shareholders, putting the valuation of the company at over $10 billion.

Corus group shareholders, including AllianceBernstein LP, Barclays Plc and Jupiter Asset Management, have diluated their stakes in the last one month.

AllianceBernstein's stake has come down to nearly 1 per cent from 5.2 per cent; Barclays Plc cut its holding to 4.7 per cent from 6.4 per cent and Jupiter Asset Management and TT International also sold the stock. Jupiter is part of Germany's Commerzbank AG.

However, it is not known whether Standard Life Plc, the biggest shareholder with 7.9 per cent stake, has reduced its stake. Standard Life had said after the Tata bid that the offer had undervalued Corus.

There was speculation that Cia Siderurgica Nacional, Brazil's fourth-largest steelmaker, had appointed investment bank Lazard to advise it on a possible bid for Corus.

Industry sources said the lack of action from any rival company indicated that Tata Steel would sail through. They added that the Corus stock would soon come down to the level of Tata Steel's offer.

Now, the stock is traded at 2.4 per cent premium over the Tata Steel offer. The Corus board members said they would subscribe to the Tata Steel offer.

The board would place the Tata Steel offer before the Corus shareholders at an extraordinary general meeting next month.

Buying Corus, formerly British Steel, will propel Tata Steel to fifth from 56th in global rankings.