TATA CSN Corus

I’ve been curiously watching the developments on the proposed takeover of CORUS for quite sometime now. TATA and CSN now seem to have been locked in a lose- lose bidding war game of one upmanship for getting CORUS.

What are the options before TATAS apart from a outright acquisition?

I think it’s merger with Corus. So rather than spending resources for acquisition of CORUS just merge TATA Steel and Corus and avoid the debt burden.The proposed entity will then have the war chest to make another ( or more – the most obvious being CSN) mega acquisition.

On the flop TATA’s own share in the merged entity will be barely in double digits.This’ll make the new entity very vulnerable to takeover .Here I think TATA’s should enfuse capital of $5-6 Billion to up their stake to more than 50%.TATA sons has the wherewithal to raise so much capital. The financial muscle can then be used to acquire another 'major steelmaker'.

But CSN here also will try to justify it’s own case of merger. Then what?

I think TATA’s should just purchase 20-25% of CSN from open market. This’ll silence CSN. The merged entity can then comfortably takeover CSN if it wants.

What CSN is really afraid of is a takeover Bid from TATA’s.

There is another win –win option .A Triple merger of CSN , CORUS and TATA Steel.
But I think CSN and TATA are poles apart in terms of culture and this option although most feasible theoretically, it is most difficult operationally and hence highly unlikely.

An Afterthought :

What could have been done to smoothly purchase CORUS ?

I think TATA’s should have bought around 20% of Corus from open market before making the bid .This would have fend off any potential bidder.