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Tata's $11.3-billion bid wins auction for Corus

February 01, 2007|From the Associated Press

NEW DELHI — Tata Steel said Wednesday that its $11.3-billion offer to acquire European steelmaker Corus is strategic to its global ambitions, even as the winning bid raised concerns that the deal's high cost could undermine the combined company's financial health.

Mumbai-based Tata Steel outbid Brazilian rival Companhia Siderurgica Nacional in what would be the biggest-ever acquisition by an Indian company.

A combined Tata-Corus could produce 25 million tons of steel a year making it the world's fifth-largest steel producer.

London-based Corus said its board of directors recommended the sale as the Tata offer represented "the best value" for the company's shareholders.

The news, which came after several rounds of bidding during an auction that started late Tuesday in London, added to a sense of national pride among many Indians and business leaders who said it would boost the confidence of other Indian companies seeking to go global.

Tata Steel is a part of the Tata Group -- a sprawling business conglomerate with diverse interests including salt and software -- that has been the most aggressive Indian company seeking overseas acquisitions to gain global visibility after thriving for decades in a protected home market.

The new offer of $11.3 billion represents a 22% premium of an already sweetened offer made by Tata Steel in October. That offer was later trumped by Companhia Siderurgica Nacional, sparking a bidding war and prompting Britain's takeover panel to order Tuesday's rare auction.

"It's a tremendous strategic acquisition," said Tata Group Chairman Ratan Tata. "I believe this will be the first step in showing that Indian industry can step outside the shores of India in an international marketplace and acquit itself as a global player."

The takeover, which must be approved by Corus shareholders, will help expand Tata Steel's reach into Europe and propel the company -- currently ranked 56th in the world in output -- into a global player in the metal business, Tata said.

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