October 20, 2006 | posted by Michael Baxter in Uncategorized |

A ring of steel seemed to separate Corus from
potential bidders. While the price of steel and other commodities soared, the company
seemed unable to attract a bidder.

Formed by the merger of British Steel and Dutch
company Hoogovens in 1999, the company had tottered on the brink of collapse in 2003,
when the share price was down to 16 pence.

It’s a different story today. Following job losses and plant closures, the company returned
to profit. But, until recently, still couldn’t attract a suitor. But now Tata Steel, the Indian steel company that currently languishes in 59th spot
in the steel league (Corus is in 8th place), has had its £4.3 billion offer for the company accepted.
The offer values Corus shares at 455 pence. And, since it’s the only serious bidder to have come out
of the furnace of merger and acquisitions rumours for some time, there seems a good chance
the bid will go through.
Some eyebrows have been raised, however. Around 60 percent of the price is coming
from borrowings, with the Indian company partially using future earnings of Corus to secure
the debt. And with that, some analysts fear that a slowdown in the steel market could leave
Tata Steel struggling to meet Coru’s pension liabilities.
Then again, Tata Steel’s parent company, Tata, is the second largest company in India with a
controlling stake in 93 businesses ranging from software to engineering, and has been around for 138
years, so you’d assume it has plenty of practice at managing its finances