A BIDDING war for steelmaker Corus was looking increasingly likely last night after a Brazilian company trumped a previous takeover offer from Indian rival Tata Steel.

Companhia Siderurgica Nacional (CSN), which tried to merge with Corus in 2002, said it had approached the Anglo-Dutch group with a takeover bid of 475p a share - valuing Corus at about £4.26bn.

That offer beat the agreed bid by Tata Steel of 455p, but was still below Corus' closing share price of 495½p.

A tie-up between CSN and Corus, which employs 3,000 people in the North-East, would create a top-five global steel group, with 24 million tonnes of annual steel production.

Yesterday, Anthony Platts, assistant director at Tees Valley investment manager Wise Speke, said Corus shares jumped by five per cent as investors sensed the start of a bid battle.

He said: "Corus' share price was 473p at the start of the day - still well above Tata Steel's bid of 455p. Now (4pm), shares have climbed up about 24p to 497p," he said.

"So, if Tata want Corus bad enough, they are going to have to put in a higher bid than CSN, I expect it will be 495p or even 500p."

Analysts saw CSN as one of the most likely companies to launch a counter-bid for Corus. It has steel operations in Brazil, the US and Portugal.

Corus has been under pressure to link up with a low-cost rival as rising raw material and energy costs in the UK and the Netherlands eroded profits.

The need to consolidate became greater with the takeover of Arcelor by Mittal Steel earlier this year.

CSN yesterday said its offer would provide Corus with a secure supply of high-quality, low-cost iron ore from its Casa de Pedra mine.

Benjamin Steinbruch, CSN chairman and chief executive, said: "A combination of CSN and Corus would create a global powerhouse with market-leading positions and exceptional distribution networks across both developed and emerging markets."

The proposed deal with Tata - part of a consortium that also owns companies including Tetley Tea - would also create the world's fifth-largest steel company and open up fresh opportunities for Corus in the rapidly-expanding Asian market.

Corus last night confirmed it had received an approach from CSN and said it would make an announcement "in due course".

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