Will TATA's suceed in the CORUS deal or CSN will steal the show

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A day after CSN made its 515-pence-a-share bid for Corus, the investment banking fraternity in the ccountry is divided on whether Tatas should back out with the deal turning more expensive by the day. ET spoke to 11 top investment bankers, of which five said that bid was now expensive and that 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 dealmakers 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 exert influence in raw material negotiations and finally of a company that didn’t let go of an opportunity to buy a world class firm. “It is for the Tata Steel board to decide on what needs to be done...on whether Corus is still a viable business proposition,” said veteran investment banker Nimesh Kampani. “But now that the bidding process has been initiated, I expect the action to get intense,” says the man who has been directly and indirectly involved in many big ticket cross border acquisitions that India Inc has seen. Banking circles were unanimous with the view that the bidding could now become very expensive. “Any bid that is much more than what was offered for Arcelor is certainly stretched,” said one banker. “If you are looking at the near term, say a time horizon of three years, then, yes, it’s expensive. But over a five-year period, it is a definite strategic fit and also, not many Coruses would be available then,” said another. Tata Steel which is currently in a technical collaboration with Arcelor and Nippon Steel for automotive steel technology, stands to benefit directly as Corus currently uses the same technology. Also, Corus’s impressive reach and presence in Europe - in 40 countries - is something that Tata Steel will take time to duplicate. The Anglo Dutch steelmaker has loyal customers in Germany, Belgium, France and other European countries which use advanced steel products that are priced at a premium. “The bidding war was bound to happen as it isn’t a controlled system anymore,” said a leading banker. But the fact is that each and every Idian wants this deal to be on Tata's side. It is expected that the next offer from Tata side will be launched just a day before the scheduled EGM(extraordinary general meeting) of Corus board and could be around 535-550 pence a share making the deal cross $10-$11 billion.It is told that the money will be arranged through TATA SOns balance sheet and some part through TCS shares.