Anyone who goes into an auction room determined to buy one item, whatever the cost, is liable to end up making a costly mistake that will cause embarrassment for years to come. But that kind of person — we should not say idiot — is just the sort of bidder dreamt of by anyone who is putting valuables up for sale. And six years ago that dream came true for Her Majesty’s Treasury.

By exploiting the monopoly of the airwaves assumed by the State, it was able to limit the number of third-generation (3G) licences available for mobile phone companies that felt they must have one. Five companies paid a total of £23 billion at auction, several times their worth today.

Far from having to have one, most buyers would have been better off without. A new airwave auction announced this week will sell many more licences, perhaps for one tenth of the value. So far, good marketing has counted for more than the latest 3G gadgets.

For different reasons, the dream now seems to be coming true for shareholders in Corus and the London Stock Exchange (LSE). Both are at the centre of bid battles that will drag on into next year.

LSE shares spent most of their first four years in a 250p to 400p range. They were mainly owned by professional investors, bankers and brokers who had voted to demutualise. Few private investors sought to second-guess the insiders. At the end of last year, however, the shares jumped to 600p after a bid from Deutsche Börse. This year, as bidders come and go, they have doubled again to about £13.20. Hedge funds are keeping the price well above the latest Nasdaq bid of £12.43.

As we know, it is more than possible that bankers and fund managers, in spite of knowing the LSE’s trade and sector trends intimately, had no idea what it was worth. But the “must-have” factor is also at work. Stock markets and derivatives markets are getting together globally. Anyone who misses the big prizes will be gobbled up or marginalised.

At least, that is what the players are led to believe by bulge-bracket deal brokers. Not coincidentally, Goldman Sachs, of New York, has reported $4.8 billion (£2.4 billion)of profit for the past 12 months. It is thought to be paying bonuses of £10 million or more to dozens of top London bankers and traders.

Goldman is advising CSN, of Brazil, in the dizzying auction of Corus, the Anglo-Dutch steelmaker that incorporates the remains of British Steel. On March 13, 2003, the last day of the bear market, Corus shares ended at the equivalent of 19.4p. This week they touched 530p, about 15p ahead of CSN’s £4.9 billion offer, which trumped successive agreed offers of 455p and 500p from India’s Tata Steel.

Steelmaking is notoriously cyclical and markets would probably not have reacted so negatively to Corus losses after the US economy briefly fell into recession had sentiment not been so gloomy in early 2003. The cycle has moved through 180 degrees since then, but at the height of a steel boom a second-division steelmaker would normally be rated well below this week’s 10.4 times latest earnings.

Even after the dot-com debacle, financiers seem convinced that we are in a new industrial paradigm for materials demanded by the likes of China and India, even though these countries are as capable of overinvestment as anyone. The real catalyst was Lakshmi Mittal building a global steel company by acquisition and then merging with Arcelor, his chief rival in this mission. Everyone else has been left behind unless they wheel and deal fast. So Corus, though hardly a trophy asset, has become a must-have property.

This process is repeatable in 2007 if you can find the right sector. The key ingredients are globalisation and intensive consolidation leading to panic for places in the brave new world. If Einstein were alive, he would doubtless reduce it to P= GC2, the equation of crazed corporate hyperactivity. It provides great opportunity, provided you invest in the target rather than the buyer.

graham.searjeant@thetimes.co.uk

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