Essar buys Canada's Algoma Steel for $1.8 bn
Monday, 16 April 2007, 19:30 IST
Printer Print Email Email
New Delhi: Indian conglomerate Essar Global's wholly owned subsidiary Essar Steel Holdings Ltd Monday announced its acquisition of Canada's Algoma Steel Inc for $1.8 billion in an all cash deal. According to an agreement signed between the companies in Canada Sunday night, Essar would be able to obtain the shares of Algoma Steel after the latter undertakes a necessary court approval. "We believe Algoma is an excellent addition to our existing steel business and also offers growth potential. This acquisition fits in with our global steel vision of having world class low cost assets, with a global footprint," Shashi Ruia, chairman of Essar Global Ltd, said in a statement. "Algoma provides us with an excellent platform for the Canadian and North American markets," Ruia added. However, the acquisition will be completed after the meeting of shareholders of the Canadian firm, which will take place in June. According to the board of directors of Algoma Steel, the shareholders would vote in favour if the acquisition. UBS Investment Bank is acting as exclusive financial advisor to Essar and sole arranger of Essar's transaction financing. Essar Global, which operates in areas such as steel, oil and gas, power, communications, shipping and logistics and construction, is expecting revenues to the tune of $10 billion by the end of 2007-08. "The board of directors unanimously supports the Essar proposal as it reflects a significant premium to the historical share price of Algoma," said Benjamin Duster, chairman of Algoma's Board of Directors. Algoma Steel, which emerged from bankruptcy protection in 2004, had achieved a turnover of $1.9 billion in 2006. The company's products are sold in Canada and the US as well as overseas. Recently, one of India's largest conglomerates, Tata group bought Anglo-Dutch steel company Corus for $12 billion. This was followed by the Birla's acquisition of Canadian aluminium company Novelis Inc. for $6 billion.
Source: IANS
siliconindia