UK watchdog sets Jan 30 deadline for Corus deal

Takeover monitoring authority to order auction if bidding war persists.

The two-month-old takeover battle over the Anglo-Dutch steel company, Corus, is entering home stretch with Britain's takeover watchdog setting a January 30 deadline for the two rival suitors, Tata Steel and Brazil's CSN.

The takeover monitoring authority also said Corus would be put to an auction if the offers were still outstanding till the deadline.

In a statement issued on Tuesday, the UK Takeover Panel said, "If a competitive situation continues to exist shortly before 30 January 2007, the panel executive may require any revised offers to be published in accordance with an auction procedure, the terms of which will be determined by the panel executive."

Corus, the subject of the takeover battle, said it would expect the competitive situation to be resolved, at the latest, on January 30, or shortly after that. It also said, in a separate statement, that an extraordinary shareholder meeting planned for tomorrow has been adjourned.

The takeover panel's decision to auction Corus, in case the competitive situation would continue, does not have many parallels. So far, the takeover panel has auctioned three companies, including Canary Wharf group two years ago.

However, it is not clear whether the panel will decide on a sealed process, where bidders' offers are final, or a standard auction held over a period of days.

Sources close to the battle over Corus said the takeover panel's move was aimed at cutting the long-drawn battle short.

"It is almost two months since the Tatas launched their bid of 455 pence a share for Corus on October 20. And it has the potential to continue for several months, keeping Corus and its shareholders in the lurch," they added.

In the absence of an intervention of the panel, CSN's offer of 515 pence a share, which is 15 pence more than Tatas', remains valid till July 20 next year.

By this time, Tata Steel may scale up its offer or any other suitor may also join in the race, resulting in a long period of uncertainty for Corus and its shareholders. Tata initially had offered 455 pence a share on October 20.

When contacted, the Tata Steel spokesperson offered no comments. A Tata group executive said Tata Steel is still in the race and will announce if there is any change in its stance.

Share prices of Tata Steel have continued its northward journey on the fear that an acquisition of Corus would have a negative impact on its balance sheet, at least in the short run.

Shares of Corus climbed to 0.38 per cent to 530 pence after the announcement of the takeover panel. The stock has gained 79 per cent this year.