Consolidation within the global steel-making sector could be coming closer, with India’s Tata Steel proposing to take over Corus, the UK’s home player, at a total cost of £5.1bn.
Tata’s offer of 455p a share values Corus at £4.1bn but Corus has £1bn of debt which would also be added to the bill.
Corus’s shares have jumped higher than Tata’s price-on-the-table, trading at 479p, which reflects speculation that the offer might need to go higher to see off rival bidders. The most likely are thought to be CSN, from Brazil, and Severstal, the biggest gun in Russia.
Should the Tata-Corus wedding take place, it would create the world’s sixth largest steel producer.
Four of the world’s biggest steelmakers are already based in Asia as the region has much lower steelmaking costs.
Tata is expected to decide its next step by the end of this week.
Tata currently ranks 56th in the global league of producers. The deal would give its products access to a new market – western Europe – as well as sophisticated technology, especially in the area of long products such as beams for the building industry.
Corus has all its existing plants in the UK and the Netherlands. Switching the emphasis to India would result in lower costs, thanks in part to access to cheap but relatively high-grade iron ore.