Third bidder in Corus takeover battle!

NEW DELHI/LONDON: While the fight between Tata Steel and CSN over Anglo-Dutch steel maker Corus continues, experts feel there is still time for a third suitor to put in bids ahead of a deadline set by the regulators.

However, there is no obvious potential suitor on the horizon and whoever decides to make this move would have to act fast and launch an offer before mid-January.

Legal experts believe that the auction process could be announced a few days before the deadline of January 30 set by the UK Takeover Panel and any revised bid from the two suitors should come by the middle of January, so that the regulators find enough time to incorporate the prevailing situation in the terms and conditions of the auction process.

And this is the time by when a third bidder, if any, should announce its offer for Corus.

While a spokesperson for the takeover watchdog declined to comment, saying it was "hypothetical", a senior Takeover Panel official, who declined to be named, said that any new offer would be given due consideration as and when it emerges.

However, the emergence of a third bidder should not jeopardise the interests of shareholders that remains on top of the panel's agenda, he said, adding that a bidding war like situation is already continuing for more than three months.

Roy-Montague Jones, partner and joint head at UK-based international law firm Richards Butler told the media : "It is still possible in theory for a third bidder to emerge."

However, if there were to be a third party wishing to bid at this stage, it should aim to announce its offer not later than mid-January, which is around the same time when any revised offer should come from Tata Steel or CSN, Roy added.


Roy has been involved in advising various Indian and global companies on their merger and acquisition deals, while Richards Butler was advisor to one of the bidders in the takeover battle for an online auction firm QXL Ricardo Plc that itself went through an auction process in 2005.

"Any such bidder would certainly discuss the timetable for their bid with the Panel on a confidential basis before announcing it. But, if a new bidder wants to secure more time to formulate its offer, it is unlikely that the Panel would significantly extend the timetable now laid down," Roy said.

While the Takeover Code is intended to ensure that shareholders are not denied an opportunity to decide on the merits of a bid, it is also the case that a target company should not be hindered in conducting its business for longer than is reasonable by a bid, the lawyer said.

An offer from a third bidder by mid-January will allow time for its interest to be factored into the auction, which would be announced by the Panel in late January, he said.

However, if the third bidder were to wait until after the auction before making a move, tactically, this would be likely to be seen as being too late even if legal control of Corus would not pass until a later date, Roy cautioned.

However, there are no obvious potential suitors for Corus as of now. Even the industry's predator, Mittal Steel, is still involved in the integration process of Arcelor deal, while other potential suitors like Russia's Severstal have denied interest.

An Arcelor-Mittal spokesperson recently said the firm was watching Corus deal but was not interested in acquiring it.

There has been also speculation about Ruias-promoted Essar group mulling a bid for Corus, given the huge cash position they might build from the delisting of some of their group companies like Essar Teleholdings, Essar Shipping and US-listed BPO arm Aegis and a possible sale of its 33 per cent stake in telecom joint venture Hutch-Essar.

However, Essar is now reportedly eyeing the remaining 67 per cent stake held by its foreign partner Hutchison Telecom (HTIL) in Hutch-Essar, which is also being courted by world's largest mobile player Vodafone and Indian telecom giant Reliance Communications.

Tatas had made a revised bid of 4.7 billion pounds (500 pence a share) on December 10 for Corus, which was countered by CSN's 4.9 billion pound offer (515 pence a share) the very next day.

With none of the two bidders willing to withdraw from the battle, the UK Takeover Panel has asked them to submit their revised bids by January 30, while ruling that an auction process would be initiated if the competitive situation is not resolved "shortly before" this date.