Mittal is first foreigner to run China steel major
Tuesday, 18 December 2007, 17:12 IST
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London: Indian-born billionaire Lakshmi N. Mittal's ArcelorMittal, the world's largest steelmaker, became the first foreign corporation to take over a Chinese steel company by signing a $1.8 billion deal with China Oriental Group Company Limited, according to reports here Saturday. However, the landmark deal came in a week that also saw Mittal lose out on a bid to take over another Chinese steel company, Laiwu Steel, because the Chinese government refused to give the go-ahead. In principle, the China Oriental deal is still subject to approval by China's ministry of commerce and the state administration for industry and commerce for anti-monopoly concerns. But ArcelorMittal Vice President (M&A) Ondra Otradovec said China Oriental is a Bermuda-registered and Hong Kong-listed private company and so may not be subject to Chinese regulations that forbid foreign companies from taking a controlling stake in Chinese state-owned companies. Under the agreement, ArcelorMittal will acquire a 45 percent stake of China Oriental from its controlling shareholders, eventually raising it to 73.13 percent. The deal is estimated to cost ArcelorMittal 8.1 billion HK dollars (US$ 1.03 billion) to acquire the 45 percent stake and an additional 6 billion HK dollars (US$0.7 billion) to buy out 26.87 percent stake currently held by minor shareholders. No fresh injection of assets is expected because the acquisition will take two or three years to complete. However, ArcelorMittal may sell some of the stake to other parties in order keep China Oriental as a listed company. Meanwhile, ArcelorMittal and Laiwu Steel announced Friday that a share purchase contract they signed in February 2006 will not be extended beyond Dec 31 because "the contract had not received the required approval from the relevant government organisations." Lakshmi N. Mittal, president and CEO of ArcelorMittal, said, "We continue to view China as an important market and will continue to look for opportunities where the company can add value to China's steel industry." Jiang Kaiwen, chairman of Laiwu Steel, added, "ArcelorMittal is well known as one of the most sophisticated producers of steel products. We are disappointed that we will not have the opportunity to directly benefit from this as strategic equity partners, but we hope we may have other opportunities to work closely together in the future." With combined revenues of US $88.6 billion in 2006, ArcelorMittal is the world's biggest steel company, with 320,000 employees in more than 60 countries. It brings together the world's number one and number two steel companies, Arcelor and Mittal Steel.
Source: IANS
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