Tata Steel could raise Corus bid before Tuesday deadline

29 January 2007

Analysts expect Tata Steel to trump rival Brazilian steel maker CSN with whom it has been locked in battle for the control of Corus Plc, Europe's second largest steel maker, before Tuesday's deadline.

The winner of the battle, which has pushed Corus shares to a seven-year high, will become the world's fifth-largest steel maker.

Companhia Siderurgica Nacional has agreed to buy Corus for 515 pence per share, or £4.9 billion ($9.6 billion), topping two offers from Tata Steel, although the Indian company could still raise its bid before the end of the 30 January deadline.

How much higher Tata Steel or CSN offer for Corus shares, which on Friday ended in London at 558 pence. While Patrick Flockhart, managing director, Steel Business Briefing, says, that if Mittal Steel could pay on a rough basis $725 or $726 a tonne for the Arcelor's capacity, Corus could fetch around 595 pence or 600 a share. "So there is room for the bidding, therefore, to go up from the current level of £5.15 pence," he says.

Other analysts feel 600 pence is too aggressive and lock the value to five hundred and eighty pence as the highest, which Tata Steel could go up to, with 540 - 550 pence being EPS neutral .

So far Tata Steel and Corus have twice made offers that now stand at 500 pence and 515 pence respectively, with CSN having made the higher bid.