Brazilians might yet unveil counterbid

So far, the focus of debate over possible rival bidders for Corus has settled on Severstal and Novolipetsk, two of Russia’s biggest steelmakers.

But also tipped to make a counterbid is CSN, the Brazilian integrated steelmaker with which Corus has twice been involved in talks over a possible merger – in 2002 and again earlier this year.

CSN has already joined other Brazilian steelmakers, such as Gerdau, in expanding overseas. It has owned a steel processing plant in Indiana, US, since 2001 and this year completed the purchase of Lusosider of Portugal from Corus. It is in talks with Wheeling-Pittsburgh, a US integrated steelmaker, although any deal faces stiff opposition from Wheeling’s shareholders. It also plans to invest $6bn to triple production in Brazil and on further overseas expansion.

CSN, which has capacity to produce 5.8m tonnes of steel a year, has a market capitalisation of about R$18bn ($8.4bn).

Like Tata’s, any offer from CSN would inevitably include a substantial proportion in equity. But with deal prices inflated by the current wave of consolidation – analysts say the group would be hard pushed to rival Tata’s £5.1bn ($9.5bn) bid for Corus.

All the same, CSN should not be written off. It is led by Benjamin Steinbruch, a talented and at times ambitious dealmaker who used his family’s textiles business to leverage his purchase of CSN at privatisation in 1993. He then surprised the industry by leading a consortium that bought Companhia Vale do Rio Doce, the world’s biggest exporter of iron ore, for $3.1bn at privatisation in 1997, although this turned out to be a deal too far and Mr Steinbruch sold his CVRD stake three years later.

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