Will the Tata-Corus deal go through?

23 October 2006

In the event of a serious challenge to the Tata bid for Corus, to what extent should Tata Steel pursue the bid? Sandeep Bhatia, head of research at UBS and Neil Buxton, managing director of GFMS share their views on the recent developments over the Tata-Corus deal. CNBC-TV18 shares with domain-b its exclusive interviews with Bhatia and Buxton

With increasingly speculation over the possibility of Brazil's largest steel maker, Companhia Siderugica Nacional (CSN), preparing to challenge Tata Steel's bid for Corus with its own counter-bid, will the Tata Group be forced in to offering a premium to its bid? To what extent should the Tatas raise their offer? (See: Brazils' CSN the only likely challenger for Tata's Corus bid)

Sandeep Bhatia, head of research at UBS and Neil Buxton, managing director of GFMS share their views on the recent developments over the Tata-Corus deal.

Bhatia says that Corus is worth 335 pence a share as a standalone entity, and the maximum price should not exceed 525 pence per share. He adds that synergies between the two companies would become negative if the price went beyond 525 pence per share.

He analyses the risks including integration, financials and operations as a result of the deal going through. Bhatia says that there is a 60 per cent to 70 per cent chance of the Tata-Corus deal going through.

Neil Buxton says that he won't be surprised to see more bids for Corus coming in by the weekend. He further adds that SeverStal, CSN and ThyssenKrupp may be likely bidders.