CC and Slaughters lead Corus and CSN's transatlantic tie-up

Clifford Chance and Slaughter and May have taken the leading roles on a groundbreaking merger between Corus and Brazilian steel giant Companhia Siderurgica Nacional (CSN). The tie-up will create the world's fifth-largest steel company and the only transatlantic one.
A Clifford Chance team led by New York-based, UK-qualified corporate partner Anthony Oldfield represented CSN. Oldfield is the relationship partner for CSN, which Clifford Chance has represented for a number of years.
In London, corporate partners David Pudge and Laura O'Neil were also involved, as was Oliver Bretz, who handled the competition elements of the transaction. Brazilian firm Machado Meyer Sendacz e Opice Advogados provided local advice.
Longstanding Corus adviser Slaughter and May acted for the UK company, with corporate partner Andy Ryde leading the deal. Corus also instructed Brazilian firm Pinheiro Neto on Slaughters' recommendation. Shearman & Sterling, Corus's US counsel for M&A, advised on the US issues involved and was led by London-based partner Bonnie Greaves.
Ryde said: “There was an intensive period of negotiations to ensure that an appropriate balance was struck on the issues of ownership, capital structure and corporate governance.”
The two companies have signed a non-binding memorandum of understanding on how to give effect to the merger. A Brazilian holding company will be set up to own 36.7 per cent of Corus. In exchange, all of CSN's shares will be sold to Corus. The Steinbruck family, which owns the majority of CSN's shares, will control the holding company.
Ryde said: “The Brazilians will be able to hold their shares in a Brazilian-listed company, which will improve liquidity and reduce the chances of share flowback.” The holding company will also be listed on the New York Stock Exchange.
Pudge said: “There were major governance issues – prima facie, when you own over 29.9 per cent of a company, you must put in a bid under Takeover Panel rules.”
Ryde added: “Technically, that level requires you to put in a general offer. In this case, we had to talk to the Takeover Panel first and we'll have a Corus shareholder vote which can 'whitewash' the transaction.”
The two merger parties also negotiated CSN membership of the Corus board. Crucially, leading CSN shareholder Benjamin Steinbruck will take over after the current Corus chairman retires.
There should be few regulatory issues. Clifford Chance competition partner Bretz said: “We coincided the announcement with the demise of the European Coal and Steel Treaty. It will be the first industry deal for years to be notified to national, rather than EU, authorities.”
Clifford Chance lawyers hope that both sets of shareholders will vote the deal through by the end of next year. Pudge said: “This is the first time anyone's ever achieved a UK-Brazilian merger. We were particularly pleased to do that in volatile market conditions.”