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The battle for acquisition of Corus Group intensified with Brazil's CSN announcing a counter offer of $9.5 billion pounds, within hours of India's Tata Steel raising its initial offer to $9.2 billion for the Anglo-Dutch steel maker.
The board of Corus, which had recommended Tata's offer of 500 pence a share to its shareholders late on Sunday night, also today forwarded the counter offer of 515 pence a share from CSN.
Noting the CSN offer, Tatas informed the London Stock Exchange: "Tata Steel is currently considering its position and will make further announcement in due course."
A delighted Corus chairman Jim Leng said: "The combination of the two businesses will create a strong platform from which to compete and grow. . . and consistent with our strategic objective."
The CSN offer is higher than the initial proposal made by it and as well as the revised Tata offer of 500 pence per share, he said.
Earlier on Monday, the Tatas raised the offer to acquire Corus Group Plc to $9.2 billion from the original $8.1 billion and the Board of the Anglo-Dutch steelmaker has recommended the higher bid to its shareholders.
Tatas' revised bid of 500 pence per Corus share comes as a surprise ahead of rival Brazilian bidder Companhia Siderurgica Nacional's formal offer. The Rio de Janerio-based firm had last month announced that it will make a counter offer of 475 pence compared to the Indian corporate's original offer of 455 pence.
Commenting on the announcement, Tata Steel Chairman Ratan Tata said: "We remain convinced of the compelling strategic rationale of this partnership and the revised terms deliver substantial additional value to Corus shareholders."
Corus Chairman Jim Leng said: "The revised acquisition terms from Tata Steel are a substantial increase from the previous offer. Accordingly, the Corus Board is pleased to recommend this to Corus shareholders."
Tatas said in a statement: 'Tata Steel is pleased to announce it has agreed to an increased recommended acquisition at a price of 500 pence in cash per Corus share.'
The terms of the revised takeover bid value the entire existing issued and to be issued share capital of Corus at about £4.7 billion ($9.2 billion), the statement said, adding that after acquisition, Tatas will explore all strategic alternatives to manage its financial exposure and enhance it through additional synergies.
The additional funds were committed through two letters of credit agreements entered this month between Tata Steel and its subsidiary Tata Steel Asia Holding Plc with Standard Chartered Bank and Standard Chartered First Bank of Korea.
The Indian corporate giant's revised bid, which is higher by 10 per cent than its original offer, puts the enterprise value of Europe's second largest steelmaker at £5.7 billion ($11.1 billion), including debt.
The new offer means a premium of about 38.7 per cent to the average closing mid-market price of 360.5 pence per Corus Share for the twelve months ended October 4, 2006, the last trading day prior to the announcement by Tata Steel.
Corus had last month recommended to its shareholders Tata's original offer of £5.1 billion, including debt, but it postponed its extra-ordinary general meeting scheduled for December 4 to December 20 to give Brazil's CSN more time to make a formal offer.
CSN, however, has not made a formal counter-offer so far.
Tata Steel Board had met on November 23, shortly after CSN announced its counter-offer, pending a formal bid. Tata Steel, though maintained silence on its Board meeting, was presumed to have communicated to Corus it would match the CSN bid, provided it was supported by Corus Board.
The Board of Corus met on Sunday and decided to recommend the revised offer of Tata Steel to shareholders. Tata Steel's acquisition of Corus will make the merged entity the world's fifth-biggest steel producer with output of about 23 million tonnes of steel a year.
Tata Steel produced more than 5 million tonnes in 2005-06, while Corus produced around 18 million tonnes. Coinciding with the revised offer, Tata Steel announced that it will continue to focus on its greenfield projects in India.
'While the Orissa and Chhattisgarh projects are expected to be completed to their full potential, the Jharkhand project will be implemented up to the first two phase of 6 million tonne capacity,' the company said in a statement.