Tata Steel may acquire at least a 20 per cent equity stake in its Anglo-Dutch rival Corus Group for pound 800 million ( $ 1.5 billion), according to a report in The Mail.

The acquisition was 'another alternative under consideration,' The paper said, adding that Tata Steel was expected to launch this week its bid for Corus and was not averse to making a hostile bid.

Tata Steel was prepared to make a hostile bid of �4.2 billion (nearly $7.79 billion) if its favoured option of a friendly merger was rejected, the UK newspaper reported on Sunday. Tata Steel spokesperson did not want to comment while the Corus Group spokesperson could not be reached.

Tata Steel has maintained silence on Corus since announcing its interest in the company two weeks ago. It had said that it was "looking at various opportunities including Corus." The announcement sent the Corus stock shooting through the roof, only to subside later when no bid materialised.

The Tata Steel-Corus combine, if it works out, will become the fifth largest steel maker in the world with a capacity of 23 million tonnes a year.

Corus has a capacity of 18 million tonnes a year while Tata Steel produces 5 million tonnes a year. Corus has no mining interest while Tata Steel has access to cheap iron ore.

Sources said Tata Steel had lined up loan up to $ 6.5 billion from its advisor ABN Amro and Deutsche Bank as well as Standard Chartered Plc to fund the pound 4.2 billion ($7.79 billion) bid.

Tata Steel might refinance the loan later through a combination of instruments including a bond issue of $2 billion. Tata Sons, the group's holding company, would chip in the remaining portion.