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Home > Business > Business Headline > Report

It'll be a long chase for Corus: Aditya Mittal | January 27, 2007 12:00 IST

The World Economic Forum kicked off in Davos on Wednesday. Head honchos from India Inc as well as foreign entrepreneurs participated in the event.

On the sidelines of this meet, Aditya Mittal, CFO of Arcelor Mittal, says it's going to be a long chase for Corus.

Aditya Mittal, the son of LN Mittal, the family that pulled off the audacious Arcelor acquisition just last year proves that a businessman of Indian origin can actually rule the world.

Excerpts of CNBC-TV18's exclusive interview with Aditya Mittal:

I think you are almost pretty much done with everything that you needed to do in terms of the approvals and all for the Arcelor-Mittal, the next big deal in this space is Tata-Corus. What is your perspective on that asset? Not too many people are happy back in India; the analyst community is unhappy on the kind of price that Tata is willing to pay for it.

The important thing is that it has recognized as the consolidation has started in the steel industry. We began it with the Arcelor deal and it is good to see Tatas and others trying to consolidate the steel industry and that is important to create healthy supply in the balance vis-�-vis the Corus deal. Clearly January 29 is important, that is when the takeover will bring all the bids together, what I understand is that it will eight rounds of bidding.

Eight open rounds of bidding and the last round is a final round and whoever has the highest bid in the ninth round is the winner. For us, we see from consolidation point of view, it is good that the steel industry is consolidating. We wish our friends in India the best and then we hope that they can be our neighbours in Europe.

The Mittal strategy has been an M&A led strategy for many years now. I am sure that you have looked at Corus yourself at some point in time, even if it was simple curiosity because the company has been up on the block for a couple of years now. What do you think about the asset and the kind of prices that we are now talking about because we have reached over 500 pence and there were some reports that this could go all the way up 600 pence; with eight rounds of bidding, it could go anywhere.

We looked at Europe, we wanted to grow in Europe and we looked at Corus, Arcelor and another assets. Clearly for our strategy, Arcelor was much better. It is a bigger company, it is in continental Europe. Corus is a great company, it has restructured itself and it has tremendous growth potential. Clearly, there are synergies between Tatas business in India and Corus' business in the UK. So that makes a good fit as well.

In terms of price, I continuously believe that the steel industry is undervalued. Steel trades at 5-6 multiples, it is a much more stable industry than it was in the past, it should have a much higher valuation, should trade much higher. I think that the multiples or the price that either Tata or CSN ends up paying for Corus is the evidence of that because CEOs or entrepreneurs believe in the future of the steel industry, but the market does not and that is the difference.

The one thing that will test acquisitions and the way they end up will be steel prices over the next ten years. They have been pretty much stagnant for the past six months, are aging upwards now. What is your forecast over where prices go because that in a sense will determine how successful you will be with the Arcelor acquisition and Tata or CSN will be with Corus?

I wish a good year in the steel industry for 2007. There was some weakness in the fourth quarter, prices are up in China by $20-25. So Asia is picking up, European prices never came down. So Europe is quite stable and then we are seeing pick up and orders and the sentiment in the US as well. So we are forecasting a better year in 2007 compared to 2006.