Corus puts 'for sale' sign on aluminium arm

Anglo-Dutch steelmaker Corus is expected to tell the City this week that it is looking to sell its aluminium business this year in a deal that could fetch £400m.

The move would be a coup for chief executive Philippe Varin after a previous attempt to sell it to Pechiney of France was foiled by opposition from Corus's Dutch directors in 2003.

It comes as speculation about the group's future intensifies amid rumours that Russian and American companies are eyeing it as a bid target. Analysts have pointed to Russian groups including NLMK, Severstahl and Evraz and America's US Steel as possible buyers. ThyssenKrupp of Germany has recently denied it is in talks to buy the group, but it is keeping a watching brief.

Corus is seen as a prime bid target as the global steel industry embarks on a round of consolidation, triggered by Indian tycoon Lakshmi Mittal's £12.6bn bid for European number one Arcelor, led by chief executive Guy Dollé. Mittal produces some 60 million tones of steel a year, while Arcelor makes 55 million, giving the combined business a total output of 115 million tonnes a year. Corus is currently the world's eighth-largest producer, turning out 19 million tonnes a year, and is seen as 'sub scale' in the carbon steel market.

Any merger or takeover deal would be eased by a successful sale of the aluminium arm, as it would demonstrate that the dysfunctional relationship between the UK and Dutch directors which led to the previous attempt being blocked in 2003 has been resolved.

Key members of the Dutch board, including its former chairman Leo Berndsen, who led the opposition to the Pechiney sale, have left the company, giving Varin greater control over corporate strategy.

Varin is keen to finalise a sale, as it would reduce debt and demonstrate to investors and potential bidders that board conflicts are a thing of the past. Potential bidders include Russians Sual and Roussal, led by oligarch Oleg Deripaska, who recently built up then sold down a stake in Corus. Others include Alcoa of the US and Novelis, the downstream business spun off from Canadian Alcan in 2005.

Varin himself has a strong incentive to sell Corus at a premium to its current 74p share price. He holds some 1.1 million Corus shares and is due to receive another tranche of 1.1 million in May.

Analysts and those close to the company believe that Corus could be taken over this year. One said: 'Will Corus be independent by 2007? All bets are off.'

Varin will unveil Corus's results for 2005 on Thursday. Analysts expect a £1bn profit on revenues of £10.2bn. However, most attention will be focused on Varin's view of prospects for the market. Expectations are for a depressed first quarter then recovery in prices through the rest of the year.

Corus declined to comment on its plans for a sale of its aluminium division.

Today's best video

Today in pictures