Corus drops the deal with CSN due to the weak markets

Corus drops the deal with CSN due to the weak markets

Corus board decided to terminate the proposed merger with the Brazilian steelmaker Companhia Siderurgica Nacional (CSN). The deal was seen to be a fruitful strategic partnership however the ongoing uncertainties in the global business environment and the financial markets led Corus to cancel such merger. The agreement in principal was signed in July 2002 and was expected to become effective by the first quarter of 2003. Corus was planning to decrease the iron ore costs by benfeiting from the iron ore mines of CSN, particulary by expanding the Casa de Pedra mine. Corus is of the opinion since early October that the market demand for steel products in its core UK and Continental European markets is lower than expected. The company's second half operating result will only be around £100million better than the first half which means a loss of £150 million, as the loss accounted to £252 million in the first half. CSN is expected to announce a strong operating result but a significant overall loss for Q3 nowadays. The overall loss is due to the continuing depreciation of real. The currency volatility could create difficulties in refinancing the debt of both CSN and Corus, which was one of the conditions of the merger. Corus now plans to restore the performance of its existing carbon steel assets and to follow the previously announced cost cutting program in short term and thereafter to grow the group.