Corus to Merge With Brazil's Csn

The Anglo-Dutch steelmaker Corus today announced plans to merge with the Brazilian steel group CSN, bringing together one of Europe's market leaders in carbon steel with one of the world's lowest-cost steel producers.

Under the deal Corus will own 62.4% of the new company, and CSN the remaining 37.6%. Corus, which employs 53,000 people, indicated that jobs would be lost. CSN has 11,900 employees.

"The potential merger is about creating growth for both companies, so it is not a jobs story," Corus said.

The deal comes three years after Corus was formed, by the merger between British Steel and the Dutch group Hoogovens. The merger follows the sale by Corus of its stainless steel interests and the decision to sell its aluminium business.

"This combination with one of Brazil's leading steelmakers, CSN, is a further major step in focusing the Corus group around a strong international carbon steel operation," said the chief executive of Corus, Tony Pedder.

"It will be beneficial for our European steel operations, both in the UK and on the continent, because access to high quality, low cost iron ore should make our steel works more competitive."

The merger with CSN, after weeks of speculation, is designed to bolster Corus's global position, helping to offset the impact of steel import tariffs imposed by the US earlier this year. Earlier this month, the US commerce department said it had postponed a decision on which foreign steel companies would gain a partial exemption from the tariffs.

Corus lost £462m in the last financial year, blaming the economic slowdown and global overproduction. The company is cutting more jobs, after announcing plans to axe about 12,000 jobs last year.

Annual cost savings from the deal were expected to be around £159m after a one-off cost of £191m. A significant proportion of the savings will arise from the group sourcing a substantial proportion of its iron ore from CSN's Casa de Pedra iron ore mine in Brazil.

Sir Brian Moffat will continue as chairman of Corus and Mr Pedder will continue as chief executive. However, Sir Brian is planning to retire by April 2004. Completion of the merger is subject to shareholder approval and regulatory clearance, and is expected during the first quarter of 2003. Mr Pedder said he did not envisage any regulatory problems.