are CSN's chances of acquiring Corus compared to Tata
Steel, and who has the edge? CNBC-TV18 reports on how
the two competitors stack up.
talks. But a higher price is not the only arrow in CSN's
quiver. The Brazilian steel maker has been buying Corus
stock to shore up its bid. On Thursday, 16 November, a
day before it counter bid on Corus, CSN bought a 2.33-per
cent stake in the Anglo-Dutch steel maker through a subsidiary
company Supernova Acquisitions at 472 pence a share. It's
total stake now stands at 3.8 per cent.
its bankers also hold stakes in Corus. Barclay owns 4.7
per cent and Goldman Sachs another 2 per cent with UBS.
This 6.7-per cent could back CSN in its chase for Corus,
unless of course, 'Chinese Walls' in investment banking
come to Tata's rescue.
to this list Standard Life Investments, Corus' single
largest shareholder at 7.9 per cent. Standard Life has
made it clear that it thinks of Tata's offer as too low.
So unless the Tatas substantially raise their bid, this
shareholder may not be in favour either.
18.4 per cent of Corus' shares are working in CSN's favour,
though that's not all that it has to offer. While India's
leaning against ore exports, Brazil, the largest iron
ore exporter in the world, is more liberal. And just like
Tata Steel, CSN is also tempting Corus with low cost ore
from its world's largest Casa de Pedra mine and access
to emerging markets.
produces about 5mt of steel a year, as presently does
Tata Steel. CSN has massive ambitions to expand its production
and output as does Tata Steel, and both companies have
access to very high quality iron ore. They are both similiar
companies and are both ambitious," comments Patrick
Flockhart, managing director, Steel Biz Briefing.
here's Tata Steel's trump card. To begin with, it has
a more professionally run company versus CSN's entrepreneurial
nature. And it has a much healthier balance sheet. Tata
Steel is an under-leveraged company with a low debt-equity
ratio of 32.86 compared to CSN's massive 135.94.
fact, CSN ended the third quarter with a net debt of $3.19
billion an over leveraged position that's also
affecting its bid for US-based steel maker Wheeling-Pittsburgh.
these qualitative factors may influence Corus' board,
shareholders may only be swayed by money. It's going to
be a tough and expensive battle for Tata Steel.