Joint Tata - Corus bid for Brazilian steelmaker CSN?

01 November 2006

Speculative reports indicate the possibility of such a bid. Is this just a wild rumour? By Rex Mathew.

A report in a national daily today speculates on the possibility of Tata Steel – Corus making an acquisition bid for Brazilian steel company Companhia Siderugica Nacional (CSN). The report suggests that Corus Group's major stakeholders and bankers who are financing Tata Steel's Corus bid are encouraging the Tata – Corus combine to make a bid for CSN and are also willing to provide their financial backing.

The report further states that the Tata group is interested in a bid for CSN only if it is a friendly deal. This is in line with the group's stated policy that it would never ever make a hostile acquisition bid.

CSN is considered as the most probable candidate to challenge Tata Steel and make a counter-bid for Corus, though a counter-bid looks increasingly unlikely with every passing day. So is this a case of a potential hunter becoming the hunted or just wild speculation?

CSN, the largest steel manufacturer in South America, was a government-owned company till 1993, when it was privatised and was acquired by a team led by local entrepreneur Benjamin Steinbruch — who is currently its chairman — for $800 million.

The company, which had accumulated losses of over $6 billion till privatisation, was restructured and has become profitable – also helped by higher steel prices in recent years.