updated 10/24/2006 4:40:55 PM ET 2006-10-24T20:40:55

Britain’s Corus Group PLC agreed to an $8 billion takeover offer Friday from India’s Tata Steel in a deal that extends the consolidation of the world’s steelmaking industry.

The bid of 4.3 billion pounds for Europe’s second-largest steel producer would be the largest takeover ever by an Indian company.

Tata, currently ranked as the world’s 56th largest steelmaker, bid 455 pence ($8.51) per share for Corus which ranks as the world’s eighth largest steel producer.

A combined Tata-Corus would have annual steel production of 25 million tons, making it the world’s fifth- or sixth-largest steel producer.

Consolidation of the steel industry has been a hot topic since Mittal Steel Co. NV won its battle to take over Arcelor SA earlier this year in a deal that will create a titan with control of close to 10 percent of global production.

Corus shares fell 1.5 percent to 471.25 pence ($8.82) in early trading on the London Stock Exchange. Tata Steel shares rose 1.2 percent to close at 508 rupees ($11) on the Bombay Stock Exchange.

“This proposed acquisition represents a defining moment for Tata Steel and is entirely consistent with our strategy of growth through international expansion,” Ratan Tata, chairman of Tata Steel, said in a statement released by the two companies to the London Stock Exchange. “We have compatible cultures of commitment to stakeholders and complementary strengths in technology, efficiency, product mix and geographical spread.”

Corus has previously said it would make sense for the company to team up with a partner with assets in countries such as Brazil, India and Russia.

“This combination with Tata, for Corus shareholders and employees alike, represents the right partner at the right time at the right price and on the right terms,” said Jim Leng, chairman of Corus.

Corus Chief Executive Philippe Varin said in a conference call that there would be no job cuts because of the deal.

“This deal is not about job losses. This is about bringing together global companies with outstanding position,” Varin said. “With this (deal) Corus will become a globally competitive company.”

Tata Steel’s Managing Director B. Muthuraman said the two companies will run as parallel entities until they are integrated over the next year.

Tata agreed to inject 126 million pounds ($235.7 million) into Corus’ pension fund.

Tata Steel, a part of the sprawling Tata Group that has interest spanning from hotel and automobiles to steel and software, plans to raise its capacity to 30 million tons by 2015 through a mix of acquisitions and greenfield projects in India and overseas.

The company currently produces 9 million tons of steel annually and is among the lowest cost producers of steel in the world.

Last December, it bought Thailand’s Millennium Steel PCL that has a capacity of 1.7 million tons. In February 2005, Tata Steel acquired the steel-making operations of Singapore’s NatSteel Ltd., winning access to its operations in seven countries, including two steel processing plants in China.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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