Mittal denies backing CSN for Corus

Favouring consolidation of the global steel industry, Arcelor-Mittal today said it was watching the Corus deal with interest but rubbished speculation that it was backing one of the bidders.

"There is no truth in these rumours. We are not providing any backing, financial or otherwise, to CSN in its bid to acquire Corus," an Arcelor-Mittal spokesperson said.

The world's largest steel maker said it was supportive of further consolidation, which it felt would be beneficial for the overall health of the industry.

A CSN spokesperson declined to comment on the issue, while adding that the company is making the offer on its own with no other industrial parties involved.

Rumour mills were agog with stories that NRI steel tycoon L N Mittal had thrown his weight behind the Brazilian steel manufacturer, which has outbid Tatas in the race for Corus.

CSN has offered the Anglo-Dutch steel company 515 pence a share, compared to Tata Steel's 500 pence per share.

Murmurs about Mittal engineering the Corus situation has been gaining currency, as Tatas are considered a more formidable rival in the global steel space.

Industry sources said that it would be no surprise if Mittal might have arranged a couple of billion dollars to fund CSN's bid, which has gone above $11 billion including debt and pension payments.

Besides, Mittal could be quite helpful in garnering the support of shareholder lobbies when the bid comes up for vote before the shareholders of Corus, they added.

Ever since its successful merger with Arcelor in June that created the world's largest steelmaker with a market share of over 10 per cent, Mittal has consistently supported further consolidation in the industry.

"We are watching Corus situation with interest but would not wish to speculate on the outcome," the spokesperson for Arcelor-Mittal said.

However, the company declined to comment on whether it foresees the eventual winner as a potential rival or which of the two could emerge as a more formidable rival.

Industry sources said that Benjamin Steinbruch, CSN's chairman and CEO, is an over-ambitious entrepreneur and he could be a more stern rival for Mittal compared with Ratan Tata.

The CSN chief's aggressive international expansion plans are clear from his past merger talks with Corus, as well as other global steel firms, they added.

Prior to the current takeover bid for Corus, CSN has also held merger talks with the Anglo-Dutch steelmaker about four years ago, while it had been in discussions with German steel major Thyssen-Krupp in 2001.

Besides, CSN was approached by Arcelor as well when the European major was seeking a white knight earlier this year to thwart a hostile bid from Mittal Steel, with whom it finally agreed to merge later.

After the merger talks failed with Thyssen-Krupp, the relations between the two companies deteriorated to such an extent that the German company publicly accused CSN in 2004 of breaching an agreement over a Brazil steel plant, which was being run jointly by them.

Thyssen-Krupp said at that time that CSN had driven the venture "to the brink of non-profitability".

An official close to the joint venture, which was terminated in 2004, said that the German company was under the impression that it was botched up by Steinbruch and this was responsible for decelerating its Brazilian expansion plans.