Corus Group


Corus Group

Infobox_Company
company_name = Corus
company_
company_type = Subsidiary
foundation = Koninklijke Hoogovens N.V. in 1918
British Steel Corporation in 1967
Merger of British Steel & Koninklijke Hoogovens 1999
location = flagicon|UK London, England, UK
key_people = Mr Philippe Varin, CEOMr Rauke Henstra, Chief Operating Officer (COO)Mrs Marjan Oudeman, Strip Products Division DirectorMr Phil Dryden, Long Products Division DirectorMr Scott MacDonald, Distribution and Building Systems Division DirectorMr Tor Farquhar, Director Human ResourcesMr Frank Royle, Director Finance products = Steel
homepage = [http://www.corusgroup.com/ www.corusgroup.com]
industry = Steel
parent = flagicon|India Tata Steel, member of Tata Group
num_employees = 50,000
revenue = £10,142 million (2005)
operating_income= £680 million (2005)
net_income =£451 million (2005)

Corus is a subsidiary of Tata Steel, part of India's Tata Group and world's fifth largest steel producer, headquartered in London, United Kingdom.

The company was formed from the merger of Koninklijke Hoogovens N.V. with British Steel Plc on 6 October 1999. The company was taken over by Tata Steel on 2 April 2007. From 1 January 2008 a new structural and management reorganisation took effect. Corus is now structured into three divisions. These are:
* Strip Products Division,
* Long Products Division,
* Distribution and Building Systems Division

It has major integrated steel plants at Port Talbot, south Wales; Scunthorpe, North Lincolnshire; Teesside, Cleveland (all in the United Kingdom) and IJmuiden in the Netherlands. It also has rolling mills situated at Shotton, North Wales (which manufactures Colorcoat products), Trostre in Llanelli, Llanwern in Newport, South Wales, Rotherham and Stocksbridge, South Yorkshire, England, Motherwell, North Lanarkshire, Scotland, Hayange, France, and Bergen, Norway. In addition it has tube mills located at Corby, Stockton and Hartlepool in England and Oosterhout, Arnhem, Zwijndrecht and Maastricht in the Netherlands. Group turnover for the year to 31 December 2005 was £10.142 billion. Profits were £580 million before tax and £451 million after tax.

On 16 March 2006 Corus announced that it had signed a letter of intent to sell its aluminium rolled products and extrusions businesses to Aleris International, Inc. for £570m. Corus would retain its smelting operations and supply Aleris under a long-term agreement. On 1 August, the sale to [http://www.aleris-europe.com Aleris Europe] was completed. Primary aluminium production remains with Corus; however, Corus has started discussions with Klesch & Company Limited, which has been granted a period of exclusivity for due diligence to be carried out. Any eventual Sales and Purchase Agreement that is reached following internal consultation and advice may also be subject to certain external regulatory clearances.

Corus is the sponsor of the Corus chess tournament in the Netherlands and the UK triathlon team.

History

British Steel

British Steel Corporation was a large British steel producer, consisting of the assets of former private companies which had been nationalised on July 28 1967 by the Labour Party government of Harold Wilson.

In 1971 British Steel sponsored Sir Chay Blyth in his record-making non-stop circumnavigation against the winds and currents, known as 'The Impossible Voyage'. In 1992, they sponsored the British Steel Challenge, the first of a series of 'wrong way' races for amateur crews.

The British Steel Act 1988 was passed by the Conservative government of Margaret Thatcher to privatise British Steel. This was achieved on 5 December 1988.

Koninklijke Hoogovens

Koninklijke Hoogovens was a Dutch steel producer founded in 1918. It was located in IJmuiden. This plant is now part of the Anglo-Dutch Corus Group steel company.

Merger

British Steel merged with the Dutch steel producer "Koninklijke Hoogovens" to form "Corus Group" on 6 October 1999. [http://www.corusgroup.com] at the time forming the third largest producer of steel behind POSCO of South Korea and Nippon Steel of Japan. British Steel formed about two-thirds of the merged group.

The Mittal Affair: "Cash for Influence"

Controversy ensued as Plaid Cymru MP Adam Price exposed the link between UK prime minister Tony Blair and steel magnate Lakshmi Mittal in the Mittal Affair, also known as 'Garbagegate' or "Cash for Influence". [ [http://news.bbc.co.uk/1/hi/wales/1813620.stm Plaid reveals Labour steel cash link Monday, 11 February, 2002, extracted 11-01-07] ] [ [http://news.bbc.co.uk/1/hi/business/1820324.stm Lakshmi Mittal, steel mill millionaire Thursday, 14 February, 2002, extracted 11-01-07] ] [ [http://news.bbc.co.uk/1/hi/uk_politics/1818955.stm Q&A: 'Garbagegate' Thursday, 14 February, 2002 extracted 11-01-07] ] Mittal's LNM steel company, registered in the Dutch Antilles and maintaining less than 1% of its 100,000 plus workforce in the UK, sought Blair's aid in its bid to purchase Romania's state steel industry. [ [http://news.bbc.co.uk/1/hi/uk_politics/1818955.stm Q&A: 'Garbagegate' Thursday, 14 February, 2002 extracted 11-01-07] ] The letter from Blair to the Romanian government, a copy of which Price was able to obtain, hinted that the privatisation of the firm and sale to Mittal might help smooth the way for Romania's entry into the European Union. [ [http://news.bbc.co.uk/1/hi/wales/1813620.stm Plaid reveals Labour steel cash link Monday, 11 February, 2002, extracted 11-01-07] ]

The letter had a passage in it removed just prior to Blair's signing of it, describing Mittal as "a friend." [ [http://news.bbc.co.uk/1/hi/uk_politics/1818955.stm Q&A: 'Garbagegate' 14 February, 2002, extracted 11-01-07] ]

In exchange for Blair's support Mittal, already a Labour contributor, donated £125,000 more to Labour party funds a week after the 2001 UK General Elections, while as many as six-thousand of Welsh steelworkers were laid off that same year, Price and others pointed out. [ [http://news.bbc.co.uk/1/hi/wales/1813620.stm Plaid reveals Labour steel cash link Monday, 11 February, 2002, extracted 11-01-07] ] Mittal's company, then the fourth largest in the world, was a "major global competitor of Britain's own struggling steel industry, Corus, formerly known as British Steel." [ [http://news.bbc.co.uk/1/hi/uk_politics/1818955.stm Q&A: 'Garbagegate' Thursday, 14 February, 2002 extracted 11-01-07] ] Corus and Valkia Limited were two of the primary employers in South Wales, particularly in Ebbw Vale, Llanwern, and Port Talbot. [ [http://news.bbc.co.uk/1/hi/wales/1827460.stm Steel firm condemns 'Mittal aid' Monday, 18 February, 2002, 14:47 GMT extracted 11-01-07] ] .

Takeover by Tata Steel

On January 30, 2007, Tata Steel, part of India's Tata Group, purchased a 100% stake in the Corus Group at 608 pence per share in an all cash deal, cumulatively valued at (USD 12.04 Billion) [cite news |first=|last=|title=India's Tata wins race for Corus|url=http://news.bbc.co.uk/2/hi/business/6315823.stm | publisher=BBC |date=31 January 2007 | accessdate=2007-11-26] .

Tata surprised the credit default swap segment of the derivative markets by deciding to raise $6.17bn of debt for the deal through a new subsidiary of Corus called 'Tata Steel UK', rather than by raising the debt itself. Tata's security credit rating is investment grade, whereas the new subsidiary may not be. The higher risk associated with raising debt through a subsidiary with a lower credit rating prompted Fitch Ratings to downgrade its rating of the credit swap risks in the takeover to 'negative'. Fitch also stated that Corus' responsibility for the debt may lead to Corus' own unsecured debt rating being downgraded. This does not affect the rating of bonds issued by Corus which are secured debt. [cite news |first=Jennifer |last=Ryan |title=Tata Debt for Corus Leaves Derivative Trades in Lurch|url=http://www.bloomberg.com/apps/news?pid=20601109&sid=anH6oe4Dyf.I&refer=home | publisher=Bloomberg |date=25 October 2006 | accessdate=2006-10-25 ]

On November 19 2006, the Brazillian steel company CSN launched a counter offer for Corus at 475 pence per share, valuing it at $8.4 Billion.

On December 10 2006, Tata preemptively upped the offer to 500 pence (the “Revised Tata Acquisition”). Other than the increased offer price, the Revised Tata Acquisition was subject to the same terms and conditions as set out in the original offer.

On December 11 2006, CSN announced a formal offer for the Company at an offer price of 515 pence per Corus Share (the “CSN Acquisition”), valuing the deal at $ 9.6 Billion.. The CSN Acquisition would also be implemented by way of a scheme of arrangement and is subject to a pre-condition that either Corus Shareholders reject the Tata Scheme or the Tata Scheme is otherwise withdrawn by Corus or lapses. The Corus board promptly recommended both the revised offers to its shareholders.

On December 19 2006, Corus announced the following:

"In the light of the competing offers for Corus by Tata Steel UK Limited (“Tata”) and CSN Acquisitions Limited (“CSN”), the Company announced on 12 December 2006 that the Corus Directors intended to propose resolutions to shareholders at each of the reconvened EGM and Court Meeting to be held on 20 December 2006 to adjourn those meetings. The Company also stated that it would announce a proposed date for those adjourned meetings in due course."

Also on December 19 2006, UK Watchdog the Panel on Takeovers and Mergers announced that the last date for each of Tata and CSN to announce revised offers for the Company, should they wish to do so, is 30 January 2007. They also warned that it would begin an auction procedure if the two remained in competition. [ [http://news.bbc.co.uk/2/hi/business/6193913.stm BBC NEWS | Business | Watchdog sets Corus bid deadline ] ]

On January 31 2007, following the lack of agreement on an offer, the previously mentioned auction process was triggered. Following the conclusion of the auction process (at an unprecedented length of nine rounds) conducted by the Panel in accordance with Rule 32.5 of the Code (the "Auction"), Tata Steel announced the proposed acquisition of Corus Group at 608p per share, that being 5p more than CSN's top offer of 603p. The £6.7 billion deal includes £500 million of debt.

The Corus Group board recommended the acquisition to their shareholders later the same day.

ee also

* Tata Steel
* List of steel producers

References


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