British Indian steel magnate's acquisition plans delayed

Tuesday, 11 May 2004, 19:30 IST
Printer Print Email Email
JOHANNESBURG: London-based Indian steel magnate Lakshmi Mittal may be celebrating his purchase of the most expensive mansion but it will be a while before he acquires former state-owned steel producer Iscor in South Africa. Mittal's company LNM Holdings has been waiting for the past six months for a decision by the Competition Commission on an application to secure a majority stake in Iscor by upping its current 49 percent holding in the company. This decision was expected Friday, but the commission has deferred it by another week, citing the need to hear the views of the South African trade and industry ministry first. Minister Mandisi Mpahlwa, who took office a fortnight ago following the national elections here, is expected by industry sources to support the application. Mpahlwa's predecessor, Alec Erwin, had intervened in the negotiations with LNM because local steel companies had objected to the high pricing structure of Iscor. Erwin had suggested that the South African government would only support the LNM takeover bid if Iscor introduced better pricing policies for local buyers. A trade and industry ministry delegation met LNM in London last week, where an agreement was reached on a new pricing model for Iscor. Analysts here said the delay in allowing the LNM takeover was also delaying the benefits that LNM could bring to Iscor, such as cost savings through the introduction of new technologies that LNM has used worldwide. They also said the South African government does not have any legal grounds to prohibit the takeover. LNM bailed out the ailing Iscor three years ago with a huge cash injection and a Business Assistance Agreement that saw LNM increasing its stakes in the company. In February 2003, LNM paid minority shareholders 1.8 billion rands to up its holding of Iscor to 47 percent. By the end of the year it had increased this to 49.9 percent. But anything more than that requires approval from the Competitions Commission.
Source: IANS
siliconindia