Tata Steel may not have to outbid CSN: Macquarie Securities

After much speculation on whether CSN will put in a counter bid or not, it finally did a 475 pence per share bid against Tata Steel's 455 pence per share offer. This pushes the deal size to $8.4 billion, as compared to Tata Steel's offer of $8.1 billion. Rakesh Arora of Macquarie Securities comments on where this story could be headed eventually.

Arora believes that Tata Steel may not have to outbid CSN offer. According to him, the cut-off price would be 540 pence per share for Corus. Moreover, Arora feels that a higher bid could impact CSN's balance sheet. CNBC-TV18 shares with domain-b its exclusive interview with Arora:

What do you make of this counter bid and where do you see the story finally ending?
Basically, everybody was taking this for granted, now that so much time has passed since Tata Steel's last offer and nothing was coming through. But the stock price was not reflecting that Corus was already ruling above the Tata Steel's bid price.

The Tata Steel stock itself has been going down. The market was expecting this — it's only the Corus and Tata Steel management that seem to have got off guard but it doesn't mean that Tata Steel has not prepared for this eventuality.

Earlier, we saw reports of their bankers advising them to make a counter bid for CSN. Now since Tata Steel doesn't have a philosophy of making hostile takeover bids, that didn't go through. So clearly that was on their agenda and they have already adequately made arrangement for excess finances.

I feel that it all depends on the Corus management - how they deal with that because one of the pre-conditions for the CSN's firm bid was that Corus management agrees to its bid. Now, having made all these noises about the good fit with Tata Steel, it could be a step backward for the CSN management.