IN JULY Philippe Varin, chief executive of Corus, and Jim Leng, the company’s chairman, flew out of London for a weekend in Dubai.

It was no mid-summer holiday. Varin and Leng had been in secret talks for months about a tie-up with Tata Steel, part of India’s Tata business empire. They were travelling to Dubai to meet Ratan Tata, Tata’s patriarch, to thrash out the deal on neutral territory.

The Dubai summit was the culmination of a search that began in October last year. Corus directors realised that the company, which includes the remaining operations of the former British Steel, faced a bleak future if it stayed independent. They approved a plan to seek a tie-up with a low-cost steelmaker in Russia, Brazil or India.

With Credit Suisse, its financial adviser, Varin and Leng devised “Project England” — an elaborate evaluation of the alternatives. To mask the real purpose of the excercise, potential partners were given the names of English towns. Tata was Truro.

Leng and Varin flew to Mumbai in November for the first talks with Tata. At first a joint venture was examined, but by the time of the Dubai meeting a bigger deal was on the table — a full-blown takeover by the Indian company of its much larger Anglo Dutch counterpart.

It was an audacious plan. The takeover envisaged would be the largest-ever by an Indian group of a foreign company, and would put in Tata’s control politically sensitive steel works — not to mentions tens of thousands of jobs — in the UK and Holland.

All the cloak-and-dagger work paid off. Tata last week announced an agreed £5.1 billion bid for Corus, and said it hoped to complete the deal by mid-January. “It’s absolutely the right deal for both companies, and has been unanimously recommended by the Corus board,” Leng said. “This brings together two companies whose value systems are very similar — and I do not say that lightly,” said Ratan Tata.

Tata does not have Corus in the bag just yet. This weekend potential rivals, including Brazil’s CSN, Germany’s Thyssen Krupp and three Russian groups — Severstal, Evraz and NLMK — were weighing up their options. Corus shares continued to trade above the Tata offer price of 455p a share (they closed the week at 473½p) indicating shareholders expected someone to try to gatecrash the deal.

Standard Life, Corus’s biggest shareholder with 8% of the stock, poured fuel on the fire by saying that the offer was “lower than we would have expected the board of Corus to agree to and recommend.”

But Tata has a trump card in its pocket — the support of the enormous pension funds that hold the retirement benefits of the 175,000-strong army of current and former Corus workers.

Corus’s pensions dwarf the company itself, with assets — and liabilities — of about £13 billion. Pension regulations in the UK make it almost certain that any change of control would have to be approved by the scheme’s trustees or the pensions regulator.

Tata’s advisers, the merchant banks ABN Amro and Deutsche Bank, have secured the support of the trustees in several rounds of cautious negotiations. As part of the deal, Tata will make up the £126m deficit in the smaller of the two pension schemes, and will increase the company’s rate of contribution to the larger main scheme, which at present shows a small surplus.

“Any new bidder would have to do the same as we have done and get the approval of the trustees. You could look at it as a poison pill and you would not be far wrong,” said one of Tata’s advisers.

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