Wednesday, December 13, 2006

No Chorus Of Approval For Corus Acquisition

The climax of the drama for acquisition of Corus is about to be enacted shortly and ironically there appears to be no chorus of approval. I had concluded my post 'The Eternal Triangle - Corus-Tata-CSN' with "What Tatas will do to win the hands of Corus? I will be happy to see Tatas a winner. Let not the acquisition drama end like the film Devdas where the hero ruins himself instead of trying to save Paro". The vey same premonition has started haunting me.
The Brazilian giant CSN initially had made an offer of 475 pence per share against Tata's offer of 455 pence per share just only to provoke Tatas to revise their offer upwards to 500 pence which was stymied within hours by its 15% hike to 515 pence. In absolute terms, Tata's offer stands at $9.1 billion as against $9.6 billion of CSN. Clearly, the eternal triangle is inviting economical trouble.
Some analysts are of the view that Tata's offer is expensive whereas others feel that this is a golden opportunity for them to emerge as the world's fifth largest steel manufacturer. A report extracted from Economic Times puts the different perspectives succinctly. "ET spoke to 11 top investment bankers, of which five said the bid was now expensive and the Tatas could do well to consolidate their presence in India, one of the largest steel markets in the world, rather than paying dearly for a foreign steel mill. But another half among the deal-makers who were polled, believes that though painful in the short term, it is the larger picture that is still attractive - of a Tata Steel that is the fifth largest in the world, of a company that is able to influence in raw material negotiations and finally, of a company that did not let go of an opportunity to buy a world class firm."
I am sure Tata has the right corporate wisdom devoid of any personal ego and backed by experts' opinion to continue the bidding war avoiding quicksand that may lie ahead. We will have to wait till the curtain comes down.

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