Mittal takes final control of S.A steel giant Iscor

By siliconindia staff writer   |   Friday, 11 June 2004, 19:30 IST
Printer Print Email Email
JOHANNESBURG: London-based steel billionaire Lakshmi Mittal wasted no time in taking final control of former state-owned South African steel giant Iscor after the Competitions Tribunal gave him the permission to do so. Mittal's LNM Holdings Thursday bought up 2,000 Iscor shares to take its stake in the company from 49.9 percent to over 50 percent, even as two major trade unions that failed in their bid to halt the acquisition said they would continue their fight through the labour courts. The National Union of Metal Workers of SA (NUMSA) and the trade union Solidarity opposed the takeover, claiming Mittal would retrench staff to justify better efficiency that they claim he has done in other acquisitions across the world. The Tribunal rejected their claims that 1,000 jobs would be shed after the takeover, accepting Iscor's argument that this process of rationalisation had started long before LNM entered the scene. The ministry of trade and industries also did not oppose the takeover after an agreement was reached with LNM last month that the company would raise Iscor's production from six to nine billion tonnes a year. Local stockbrokers saw the takeover as a good move. Analyst Ronnie Klipin told the daily Business Day here that the takeover was positive, as it would import "technical know-how". LNM has said it will introduce proprietary technologies to increase efficiencies at Iscor, something it could only do if it held a majority stake in the company. Klipin also said LNM's expertise was essential for the development of industries like the motor sector, which needed new technology to keep up with global trends. Klipin called for the tribunal decision to be seen "unemotionally" and in the context of current consolidation in the global steel industry. LNM, the world's second largest steel producer, is expected to raise its holding in Iscor to 60 percent within a few months. At that point, LNM would be obliged by South African legislation to make an offer to buy out minority shareholders. LNM bailed out the ailing Iscor three years ago with a huge cash injection and business assistance agreement, in terms of which it gradually increased its stake in the company.