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Thousands of jobs on the line as Tata raises stakes for Corus

Tim Webb
Saturday 27 January 2007 20:00 EST
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Indian firm Tata Steel is set to trump Brazilian rival CSN's offer for steelmaker Corus this week, prompting fears about thousands of UK jobs.

The Takeover Panel has decided to hold an auction for the Anglo-Dutch steelmaker on Tuesday to end the three-month takeover battle. There will be a maximum of nine rounds of bidding for Corus, whose shares closed at 558p on Friday, valuing the company at £5.2bn.

The former British Steel has agreed a 515p-a-share offer from CSN, beating two previous offers from Tata Steel. But Tata Steel is expected to submit a higher bid, of at least 550p a share, this week. It is not known if CSN, whose bid is made up of more debt than Tata Steel's, will increase its offer in response.

But analysts say that a successful bid by Tata Steel is likely to result in UK job losses sooner than under CSN's ownership.

Luc Pez, an analyst at SG Securities, said that both companies would want to shut down Corus's slab-steel manufacturing operations because it is cheaper to make it themselves. But he said Tata Steel could do this sooner than CSN because it is planning to start exporting slab steel as early as 2008, whereas CSN will probably not do so before 2010.

"Both CSN and Tata are likely to close one or more of Corus's blasting furnaces in the UK. But the chances of CSN doing this before 2010 are remote because it will not have the capability to export slab steel before then. If Tata bought Corus, you could see a closure of Port Talbot happening by 2009 or 2010, for example, because the Indian company's slab-for-export project will be commissioned earlier."

Corus employs 24,000 workers in the UK. It has 3,000 staff at Port Talbot, although fewer than half of these are involved in slab-steel manufacturing. Unions have not asked for, or been given, assurances about jobs.

Both CSN and Tata Steel want to buy Corus for its technology, its finished-products operations and its customer base.

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