Who will eventually get Corus?
20 November 2006
There are reports that Tata Steel may raise its $8 billion offer for Corus countering a rival bid by Brazil's CSN. However, experts feel that the prices won't be dramaticaly higher, reports CNBC-TV18.
"I think we shouldn't presume that Tata will run out of the race. They will sharpen their pencils, CSN will sharpen their pencils, and see what gives them value. It's a constantly changing situation and really to try and guess at what stage it will go is not really there for me to count," says NRI entrepreneur, Lord Swaraj Paul.
Given the cash nature of both bids, the shareholders are expected to go simply for the better offer at face value.
"It doesn't matter to them greatly what happens to Corus once they've got their money. So they don't have to judge, if Tata and CSN were offering shares, there would be much bigger judgments to be made in terms of the companies," says steel expert, Mike Mytton.
The Tata and the Corus management have struck up a good relationship, but in the end that may count for nothing.
'It has become a Dutch option. God only knows how far it can go. It all depends who values the company more, and for both parties it is a good situation. Corus is a strong company, it fits beautifully with Tatas, beautifully with CSN. So as they say, beauty lies in the eyes of the beholder, so whoever likes it better, he will pay more for it,' adds Mike Mytton.
But there is a view in the market that the final price may not be dramatically higher than the figures now being discussed.
'I personally think that the price now is not terribly far from what it would end up to be. The offer now is 475 pence for Corus, that's quite expensive for Corus. It will probably go further, the shares are expecting to go further, it's now 495 pence. So they are expecting further movement to happen, but it can't be a massive shift away from that region,' says Mike Mutton.
Just what Tata had feared, shareholders had hoped for, and the Corus board wanted to evade. The deal is now in an upward spiral of bids; no one is certain who drops first, and who wins — at what price.