CSN's Corus play faces EU anti-trust probe

The shadow of the European Commission's anti-trust proceedings is hanging over Companhia Siderurgica Nacional's (CSN's) bid for Anglo-Dutch steelmaker Corus.

Both companies have a significant presence in the manufacture of tinplate in Europe.

In a notice published in its official journal, the commission said yesterday that the proposed amalgamation could fall within the scope of its merger regulations. It invited observations from interested parties by January 19 on the issue.

Tata Steel has an advantage on this issue as it received the go-ahead from the commission, which found that the Tata company's bid for Corus would not impede effective competition in the EU steel market.

Analysts said the Brazilian steelmaker's attempt to acquire Corus might trigger the commission's merger regulations on the grounds that the amalgamated entity could affect the competition in the European steel markets.

They added that any objections to the CSN bid were likely to centre on tinplate. CSN has one of the world's largest single-site tinplate mills in Brazil with an annual capacity of 1.1 million tonnes.

CSN also owns Portugal's Lusosider, which produces tinplate, galvanised and cold-rolled coil. Corus is among the top three tinplate producers in Europe, with manufacturing facilities in the UK, the Netherlands and Norway.

A CSN spokesperson, when contacted, told Business Standard that there was no overlap between the businesses of Corus and CSN. "This is a routine issue," he said.

Mittal Steel's acquisition of Arcelor triggered competition rules in the US. Mittal Steel had pledged to sell Dofasco to German company ThyssenKrupp if it succeeded in buying Arcelor.

Investment bankers said Tata Steel, however, might not wait for the ruling of the commission's anti-trust department.

They added that Tata Steel was likely to announce its revised offer next week, well ahead of the UK takeover regulator's deadline of January 30 for the two bidders to make their final offers.

The commission had set a provisional deadline of February 5 for ruling on the proposed transaction of CSN.

They added that Tata Steel might next week revise its offer for Corus, 7-10 per cent higher than its previous offer of £5 a share. Till now CSN's offer of £5.15 stands higher than that of Tata's.

An offer of £5.5 a share, 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.

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.