RECOMMENDED REVISED ACQUISITION of Corus by Tata Steel
10 Dec 2006
The boards of Tata Steel and Corus are pleased to announce that they have agreed the terms of an increased recommended Acquisition (the "Revised Acquisition") at a price of 500 pence in cash per Corus Share.
Details of the terms of the original Acquisition, also recommended by the Board of Corus, were set out in the Scheme Document posted to Corus Shareholders on 10 November 2006.
Commenting on today’s announcement, Ratan Tata, Chairman of Tata Steel, said: “We remain convinced of the compelling strategic rationale of this partnership and the revised terms deliver substantial additional value to Corus shareholders.”
Jim Leng, Chairman of Corus, said "The Revised Acquisition terms from Tata Steel are a substantial increase from the previous offer. Accordingly, the Corus Board are pleased to recommend this to Corus Shareholders".
Defined terms in this announcement have the same meaning as in the Scheme Document.
1. Terms of the Revised Acquisition
Under the terms of the Revised Acquisition, Corus Shareholders will be entitled to receive 500 pence in cash for each Corus Share (the "Revised Price"). This represents a price of 1000 pence in cash for each Corus ADS.
The terms of the Revised Acquisition value the entire existing issued and to be issued share capital of Corus at approximately £4.7 billion and the Revised Price represents:
- an increase of approximately 10 per cent. compared to 455 pence, being the Price under the original terms of the Acquisition;
- on an enterprise value basis, a multiple of approximately 7.5 times EBITDA from continuing operations for the twelve months to 30 September 2006 (excluding the non-recurring pension credit of £96 million) and a multiple of approximately 5.9 times EBITDA from continuing operations for the year ended 31 December 2005;
- a premium of approximately 38.7 per cent. to the average closing mid-market price of 360.5 pence per Corus Share for the twelve months ended 4 October 2006, being the last Business Day prior to the announcement by Tata Steel that it was evaluating various opportunities including Corus; and
- a premium of approximately 22.7 per cent. to the closing mid-market price of 407.5 pence per Corus Share on 4 October 2006, being the last Business Day prior to the announcement by Tata Steel that it was evaluating various opportunities including Corus.
The terms of the Revised Acquisition described in this announcement remain subject to the Conditions and do not affect Tata Steel’s intentions regarding the business of Corus, its management, employees and locations, nor the proposals relating to Corus’s pension schemes, the Corus Share Schemes, Convertible Bonds or cancellation of the Deferred Shares, each as described more fully in the Scheme Document.
Further details of the Revised Acquisition will be contained in a circular which is expected to be posted to Corus Shareholders shortly. On 4 December 2006 the EGM and Court Meeting of Corus were adjourned to 20 December 2006. Corus intends to advise shareholders as appropriate in due course, and in any event in advance of the meetings, on the action that shareholders should take at those meetings.
2. Recommendation
The Corus Directors, who have been so advised by Credit Suisse (as lead financial adviser), JPMorgan Cazenove and HSBC, consider the terms of the Revised Acquisition to be fair and reasonable, so far as Corus Shareholders are concerned. Accordingly, the Corus Directors unanimously recommend that Corus Shareholders vote in favour of the Revised Acquisition as they have undertaken to do in respect of their own beneficial holdings of Corus Shares, representing approximately 0.1 per cent. of the existing share capital of Corus.
Although Credit Suisse is acting as lead financial adviser to Corus, other members of the Credit Suisse Group are, with the consent of Corus, providing acquisition finance and related services to Tata Steel in relation to the Revised Acquisition and, as a consequence, Credit Suisse is a connected party to Tata Steel. JPMorgan Cazenove, as part of the JPMorgan group, has historical relationships with the Tata companies and, as a consequence, is also a connected party to Tata Steel. HSBC is therefore providing independent advice to the Board of Corus in connection with the Revised Acquisition for the purposes of Rule 3 of the Code. In providing advice to the Corus Directors, Credit Suisse, JPMorgan Cazenove and HSBC have taken into account the commercial assessments of the Corus Directors.
3. Financing
The financing arrangements relating to Tata Steel UK, as described in Part Nine of the Scheme Document, remain in place. The additional funding required under the proposed terms of the Revised Acquisition will be funded by way of two letter of credit facility agreements dated 5 December 2006 and 10 December 2006 respectively, between, among others, TATASTEEL Asia Holdings Pte Ltd, Tata Steel, Standard Chartered Bank and Standard Chartered First Bank of Korea.
ABN AMRO and Deutsche Bank, as joint financial advisers to Tata Steel and Tata Steel UK, are satisfied that sufficient resources are available to satisfy in full the consideration payable to Corus Shareholders under the proposed terms of the Revised Acquisition.
4. Implementation Agreement and Inducement Fee
The Implementation Agreement as described in the Scheme Document remains in effect. The amount of the Inducement Fee referred to in the Implementation Agreement is 1 per cent. of the value of the Revised Acquisition calculated by reference to the price per Corus Share and the fully diluted share capital of Corus, together with an amount equal to any VAT which is recoverable by Corus (if applicable).
5. Disclosure of interests in Corus and irrevocable undertakings
Tata Limited, a wholly owned subsidiary of Tata Sons, holds 2,125 Corus Shares. Since Corus Shares held either by members of the Tata Steel Group or by Tata Limited are excluded from the definition of Scheme Shares, Tata Steel will not be entitled to vote these Shares at the Court Meeting.
Tata Steel UK has received irrevocable undertakings to vote in favour of the Revised Acquisition and the resolutions at the Court Meeting and EGM from the directors of Corus in respect of 1,164,416 Corus Shares, representing approximately 0.1 per cent. of the existing issued ordinary share capital of Corus. These undertakings are in respect of their entire beneficial holdings of Corus Shares. Further details relating to these undertakings, including the circumstances in which they cease to have any effect, were included in the Scheme Document.
The interests of the Deutsche Bank Group consist of, as at 7 December 2006, a long position of 4,786,061 Corus Shares, a long position of 472,597 Dutch Bonds and a long position of 76,336 Euro Bonds. For reasons of confidentiality, only limited enquires have been made as to the interests of the Deutsche Bank Group and a further announcement detailing such interests will be made if required.
Except as disclosed in this paragraph 5, as at 7 December 2006, being the last practicable date before this announcement, neither Tata Steel or Tata Steel UK, nor any of the directors of Tata Steel or Tata Steel UK, nor so far as Tata Steel and Tata Steel UK are aware, any person acting in concert with Tata Steel or Tata Steel UK, (i) has any interest in or right to subscribe for any relevant Corus securities, nor (ii) has any short positions in respect of relevant Corus securities (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to take delivery, nor (iii) has borrowed or lent any relevant Corus securities (save for any borrowed shares which have been on-lent or sold).
6. General
Save as set out above, in all other respects, including the availability and terms of the Loan Note Alternative, the Revised Acquisition will be subject to the Conditions and on the same terms set out in the Scheme Document.
Appendix I sets out the bases and sources of certain information contained in this announcement.
Enquiries:
| Tata Steel Limited |
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| Koushik Chatterjee, Vice President Finance | Tel: +91 (0) 22 5665 8112 |
| Sanjay Choudhry, Head of Corporate Communications | Tel: +91 (0) 65 7243 1142 |
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| ABN AMRO (financial adviser to Tata Steel and broker to the Acquisition) | |
| Jitesh Gadhia | Tel: +44 (0) 20 7678 7678 |
| Richard Walker | Tel: +44 (0) 20 7678 1451 |
| Paul Nicholls (corporate broking) | Tel: +44 (0) 20 7678 8000 |
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| Deutsche Bank (financial adviser to Tata Steel and broker to the Acquisition) | |
| Brett Olsher | Tel: +44 (0) 20 7545 8000 |
| Anthony Parsons | Tel: +44 (0) 20 7545 8000 |
| Charlie Foreman (corporate broking) | Tel: +44 (0) 20 7545 8000 |
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| Rothschild (financial advisor to Tata Steel) | |
| Richard Murley | Tel: +44 (0) 20 7280 5440 |
| Meyrick Cox | Tel: +44 (0) 20 7280 5072 |
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| Financial Dynamics (PR adviser to Tata Steel - UK) | Tel: +44 (0) 20 7269 7121 |
| Andrew Lorenz |
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| Richard Mountain |
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| Christopher Clark |
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| Vaishnavi Corporate Communications (PR adviser to Tata Steel – India) | |
| Manoj Warrier | Tel: +91 (0) 22 6656 8787 |
| Natasha Pal | Tel: +91 (0) 22 6656 8787 |
| Vishal Mehta | Tel: +91 (0) 22 6656 8787 |
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| Corus Group plc |
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| David Lloyd, Chief Financial Officer | Tel: +44 (0) 20 7717 4557 |
| Emma Tovey, Director, Investor Relations | Tel: +44 (0) 20 7717 4504 |
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| Credit Suisse (lead financial adviser to Corus) | |
| James Leigh-Pemberton | Tel: +44 (0) 20 7888 8888 |
| Jeremy Fletcher | Tel: +44 (0) 20 7888 8888 |
| Zachary Brech | Tel: +44 (0) 20 7888 8888 |
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| JPMorgan Cazenove (joint financial adviser and corporate broker to Corus) | |
| Edmund Byers | Tel: +44 (0) 20 7588 2828 |
| Barry Weir | Tel: +44 (0) 20 7588 2828 |
| Matthew Lawrence | Tel: +44 (0) 20 7588 2828 |
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| HSBC (Rule 3 adviser to Corus) |
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| Adrian Coates | Tel: +44 (0) 20 7992 2326 |
| Charles Packshaw | Tel: +44 (0) 20 7992 2162 |
| Raj Kohli | Tel: +44 (0) 20 7992 2328 |
| Jan Sanders | Tel: +44 (0) 20 7992 2115 |
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| Brunswick (PR adviser to Corus) | Tel: +44 (0) 20 7404 5959 |
| Kevin Byram |
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| Laura Cummings |
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| Ash Spiegelberg |
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