Tatas face bidding battle in Vietnam

Tata Steel is heading for another prolonged bidding war overseas. The company's proposed acquisition of Vietnam-based Vinausteel and Structural Steel Engineering (SSE) has taken a new turn with rival suitor, Prudential Vietnam Securities Investment Fund Management Company, launching an all-cash unsolicited takeover for parent, Vietnam Industrial Investments (VII).

The unsolicited offer came after the legal counsel of NatSteel, a part of Tata Steel, accused VII of breaching their agreement on the sale of Vinausteel and SSE and has also threatened that it will take legal recourse if the agreement is not implemented.

This is for the second time that Tata Steel is getting into a take-over battle. It acquired the Anglo-Dutch steel company Corus Group after beating rival suitor, CSN of Brazil, through auction.

Bankers close to the development said VII's lawyers have received an unsolicited offer from Clayton Utz, on behalf of Prudential, which stated that the fund management company and VII's managing director Henry Lam Van Hung, who holds 10.46 per cent stake, intended to go for an off-market cash takeover. Lam held 10.46 per cent in VII.

The bid would be made through an entity jointly held by Prudential, which manages and advises over $1.3 billion in funds, and Lam. Lam is stepping down from his current position for the duration of the offer period. Tata Steel did not "wish to comment at this point in time." The Prudential offer values VII at over Rs 80 crore. The VII AGM slated for today to choose the competing offers for its two subsidiaries, has been adjourned. NatSteel announced in March that it would acquire 100 per cent interest of SSE Steel and 70 per cent in Vinausteel.

The transaction was to be completed by June. The impasse began with Prudential launching an unsolicited offer of $13.3 million, 10.65 per cent higher than the NatSteels, to acquire majority stake in these two companies in May. VII's independent directors felt that the Prudential offer had more certainty and demonstrably better terms than NatSteel's.

VII has also requested the Australian Securities Exchange for a trading halt in its shares. The halt is likely to continue, till an announcement is made by the company.

SSE Steel is a 250,000 tonne bar/wire rod mill and Vinausteel produces 180,000 tonnes of reinforcing bars.

The transaction was to be completed by June. The impasse began with Prudential launching an unsolicited offer of $13.3 million, 10.65 per cent higher than the NatSteels, to acquire majority stake in these two companies in May. VII's independent directors felt that the Prudential offer had more certainty and demonstrably better terms than NatSteel's.

VII has also requested the Australian Securities Exchange for a trading halt in its shares. The halt is likely to continue till an announcement is made by the company.

SSE Steel is a 250,000 tonne bar/wire rod mill and Vinausteel produces 180,000 tonnes of reinforcing bars.