Corus, the Anglo-Dutch steelmaker, on Friday looked set to become the subject of a bidding war after Companhia Siderurgica Nacional, the Brazilian steel group, made a £5.3bn ($10bn) bid approach that could trump last month’s £5.1bn agreed offer from Tata Steel of India.

CSN approached the board of Corus “regarding a proposal to acquire the company” for 475p-a-share in cash. It said that it still had to carry out due diligence on Corus before making a formal bid but a person close to CSN said the group was keen to make a bid “as soon as possible”.

Corus on Friday confirmed that it had received an approach from CSN, and said it would make a further announcement “in due course”. Corus shareholders are due to vote on Tata Steel’s offer on December 4.

The Brazilian group said its proposed deal would create one of the world’s top five steelmakers, with annual production of 24m tonnes.

In 2002, the two companies attempted to merge, with Corus taking the lead in the deal, but talks broke down. More recently, Corus and CSN have worked on a steel joint venture in Portugal.

Corus shares jumped 22.5p on Friday in London, or almost 5 per cent, to 495.5p. The stock had been trading well above the level of Tata’s 455p-a-share offer for some time, stoking rumours of a counter-bid. Corus shares started the year at 300p, and have risen in line with a recovery in global steel prices.

Tata Steel declined to comment on Friday. The group has suggested in the past that it would be unlikely to raise its bid for Corus.

CSN said that it had already built a stake of about 3.8 per cent in Corus. Its offer values Corus’s equity at £4.5bn. Including Corus’s £800m debt, the deal would be worth about £5.3bn.

The Brazilian group added that the deal would enable Corus to secure supply of high-quality, low-cost iron ore from CSN’s Casa de Pedra mine, one of the largest captive mines in the world. CSN is self-sufficient in iron ore, one of the main raw materials in steel-making, and as a result has higher profit margins than many of its peers.

It is keen to buy Corus to tap into its extensive sales network in Europe as well as its strong research and development division.

Following the takeover of Arcelor by Mittal Steel earlier this year, steel companies are under increasing pressure to consolidate to compete with the enlarged Arcelor Mittal group, which is by far the world’s largest steelmaker.

CSN said it had lined up financing for the proposed deal from Barclays Bank, Goldman Sachs and BNP Paribas. Lazard is acting as lead financial adviser to CSN, with Goldman Sachs acting as adviser and joint broker.

Additional reporting by Joe Leahy in Mumbai

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