Tata Steel wins EU approval for Corus acquisition

Rex Mathew
22 December 2006

The European Union has approved the proposed takeover of Corus Group by Tata Steel. The proposed deal was cleared after the EU anti-trust office said it would not impede effective competition in Europe. The deal was earlier approved by the US anti-trust authorities and, with the EU approval, has now cleared all regulatory hurdles.

Anti-trust approvals are required in major markets for all mergers and acquisitions to ensure that the combined entity would not have a negative impact on competition and hence would be harmful for consumer interests.

Brazilian company CSN, which has made a higher bid than Tata Steel for Corus, is yet to receive anti-trust approvals. CSN announced its bid much later than Tata Steel and is understood to have filed for regulatory approval.

Industry observers do not anticipate any problem for CSN getting such approvals, though surprises cannot be ruled out completely. Like Tata Steel, CSN does not have any major operations in either the US or Europe. CSN had recently withdrawn its bid to acquire a US steel maker, but has a medium-sized galvanised products plant in Portugal.

After CSN''s last offer for Corus at 515 pence per share, Tata Steel has not made any announcements. Corus has recommended both offers to its shareholders and has indefinitely extended a proposed shareholders'' meeting to consider the bids.

Meanwhile, the UK takeover panel has set 30 January, 2007, as the deadline for revising the bids. After the deadline, the winner would be decided by a one-time final bid auction or an open auction, which may last for several days.