Tata Steel clinches deal for takeover of Corus valued at GBP 4.3 bn

Mumbai, Oct 20 (UNI) Steel major Tata Steel has finally clinched the deal from Anglo-Dutch steelmaker Corus Group at a price of 455 pence in cash for each share valuing Corus at GBP 4.3 billion takeover bid, creating the world's fifth-largest steel company.

The deal, announced today at London, is India's largest ever foreign takeover and extends a wave of consolidation in the fragmented steel sector after Mittal Steel's US dollars 31 billion acquisition of rival Arcelor this year.

Tata Steel agreed to refinance the majority of Corus' debt and to inject funds into its pension plan. It also agreed to a one per cent break fee if the deal collapses due to a rival bid. The deal gave Tata Steel access to Corus' strategic assets in Europe and propelled it to the world's number five position from 56th currently.

The combined group will have proforma steel production of 23.5 million tonnes in 2005, the company said.

''Tata Steel's strategy going forward is to grow fast, both in India and overseas and be a consolidator in the steel industry,'' Tata Steel Managing Director B Muthuraman told reporters here on a conference call from London.

He refused to rule out cutting Corus' 47,000-strong workforce, saying there were no short-term plans to relocate plants. Corus employs most of its staff in the United Kingdom and the Netherlands.

Corus Chairman Jim Leng said the deal helped to give it access to low-cost output and high growth markets and followed talks with companies in Brazil, Russia and India.

Tata said the deal valued Corus at a multiple of about 5.4 times underlying earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations for 2005.

Corus, created through the merger of Dutch firm Hoogovens and British Steel in 1999, agreed in March to sell most of its aluminium assets in a deal that analysts said paved the way for the company to take part in steel consolidation.

Meanwhile, the Board of Tata Steel at its meeting today here approved acquisition of the entire issued share capital of Corus Group plc at a price of 455 pence in cash for each share valuing Corus at GBP 4.3 billion.

More UNI SN/KKD SSS SKB1832