Tata may bid 10% more for Corus

Final bid expected to be placed in a fortnight.

Tata Steel is in the closing stages of putting in a final bid for Anglo-Dutch steelmaker Corus. The bid is expected to be priced 7-10 per cent higher than its previous offer of £5 a share.

The Tata group is in no mood to give up its fight and recently held several rounds of meetings with its bankers for the final offer, which is expected to be submitted in a fortnight, according to sources close to the development.

An offer of £5.5 a share, which is 10 per cent higher than its previous offer of £5 a share, will cost Tata Steel over $10 billion. A 7 per cent higher bid will mean £5.35 a share for Corus shareholders.

Tata Steel could also sweeten its bid further by offering "something more" than what CSN offered to the pension fund of Corus, sources said.

The Tata Steel spokesperson declined to comment.

Investment banking sources said Tata Steel's earlier move to preempt the Brazilian steel company Companhia Siderurgica Nacional's (CSN's) initial approach of £4.75 a share by announcing £5 a share offer was not well timed. Within hours of the Tata Steel offer, against its previous bid of £4.55 a share, CSN announced its £5.15 a share offer.

Tata Steel would place its final bid at least 10-15 days before the January 30 deadline set by the UK Takeover Panel, sources added.

The Takeover Panel may auction Corus if a competitive situation continues beyond January 30. The panel may also decide on a sealed process where bidders' offers are final, or a standard auction held over a period.

A source in the Tata group had earlier told Business Standard that they would play the bidding game "sensibly" and "without hurting the interest of its shareholders."

According to analysts, a $10-billion bid would not stretch the balance sheet of Tata Steel, although the short-term prospects of this acquisition might not be very attractive.

STORY SO FAR

Oct 20: Tata Steel announces cash offer of £4.55 a share; Corus board approves

Nov 10: Corus calls an EGM on December 4 to consider the Tata Steel offer

Nov 17: CSN announces indicative bid of £4.75 a share

Nov 27: Corus postpones EGM to December 20 to allow CSN more time to formalise its offer

Nov 29: Corus reports a 60 per cent surge in third-quarter profits

Dec 10: Tata Steel ups its offer to £5 a share

Dec 11: CSN raises its terms to £5.15; Corus directors switch their recommendation to the Brazilians