Odds rise against Tata's Corus plan

Tata Steel's chances of acquiring Anglo-Dutch steel giant Corus Group have suffered a jolt with bankers and brokers allied to Brazil's Companhia Siderurgica Nacional (CSN) scaling up their combined stake in the company to over 19 per cent.

Also, CSN announced today that it would launch a firm bid by December 4, when the Tata Steel offer would be placed before Corus shareholders at an extra-ordinary general meeting (EGM).

Based on information given by Corus to the London Stock Exchange today, the combined equity holding of CSN and bankers and brokers allied to it has risen to 19.5 per cent since CSN approached the Corus board with a 475-pence-a-share offer.

While CSN indirectly holds a 3.8 per cent stake, UBS AG, through its business group and legal entities, holds 7.36 per cent, Goldman Sachs holds 4 per cent, and Barclays, 4.7 per cent.

UBS is acting as a joint broker to CSN, which is also working with Barclays Capital, Goldman Sachs, and BNP Paribas on the debt financing package for the deal. However, any combine of bankers and brokers may turn out to be a fickle one, with their deciding to go with the winning bid.

Analysts said Tata Steel would also have to watch out for Standard Life Investments, the largest shareholder in Corus with a 7.5 per cent stake, which had said after Tata Steel's 455-pence-a-share offer that it did not reflect the true value of the Corus stock.

The shareholding of these entities, which are either associates of CSN or unhappy with the Tata offer, gains significance as the resolution pertaining to the Tata bid would have to garner support from 50 per cent of shareholders and 75 per cent of shares at the EGM.

Corus has around 158,000 registered shareholders. Institutional investors account for around 90 per cent of the total shareholders. The remaining 10 per cent is held by individual investors.

Tata Steel is keeping its cards close to the chest. The domestic steel major today said, "Tata Steel did not take any decision at its board meeting held yesterday in the manner speculated in the media."

In a parallel development, CSN Chairman and CEO Benjamin Steinbruch said he would place a firm offer before the EGM on December 4.

A 40-member CSN team has been camping in London to complete due diligence at breakneck speed since the company approached Corus with a 475-pence-a-share offer. The team includes Steinbruch.