Corus accepts Tata offer

The board of anglo-dutch steel producer Corus has approved a UK£ 4,3 billion (€ 6,4 billion) acquisition bid from India-based Tata Steel. The deal has yet to be accepted by shareholders.

Tata's offer of UK£ 4,55 (€ 6,78) per share is based on a +26.2% premium on Corus' average share price in the last 12 months. However, the offer announcement saw Corus' shares rise to UK£ 4,74 (€ 7,06), indicating holders were looking for a higher offer. Under the deal Tata will also pay UK£ 126 million (€ 188 million) into Corus' pension fund to make up the current shortfall.

Despite being India's largest private sector steel producer, Tata's output last year was just 5,3 million tonnes. This ranks it as the world's 56th largest steel producer. In contrast, Corus was ninth largest in the world last year, and second in Europe, with production of 18,2 million tonnes and revenues of UK£ 9,2 billion (€ 13,7 billion).

If the merger goes ahead, the new company will be the world's fifth largest steel producer, with pro- forma production of 23,5 million tonnes.

Corus was formed in 1999 by the merger of the UK's British Steel, and The Netherlands' Hoogovens. However, the company struggled for profitability, in its early years. In 2002 it initiated the sale of much of its Aluminium division in a bid to cut losses and raise cash, and in 2003 CEO Tony Pedder resigned due to the company's poor performance.