Global steel space sees another Indian takeover

Thursday, 14 June 2007, 07:00 Hrs
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Toronto/Mumbai: Shareholders of the Ontario-based Algoma Steel Inc have approved the company's sale to Essar Steel of the Ruias for $1.58 billion, yet another mega acquisition by an Indian company in the global steel space.

Eighty-two percent of the shareholders of the Sault Ste. Marie-based steel firm voted in favour of selling stake in Algoma to Essar Steel Holdings for Canadian $56 per share.

"If anything, I think this takeover is going to be very good for Algoma Steel and Sault Ste. Marie," said Dennis Turcotte, CEO of the Canadian company.

"We think it's a great next step for Algoma in its progress as a leading steel producer in North America," Algoma chairperson Benjamin Duster added. The deal is expected to conclude by June 18.

The offer price represented a premium of 48 percent to Algoma's volume weighted average stock price for the 20-day period ended Feb 14, when Algoma confirmed that it was in discussions regarding a potential transaction.

"We believe Algoma is an excellent addition to our existing steel business and also offers growth potential," Shashi Ruia, chairperson of the Essar Group, had said at the time of making an offer.

"This acquisition fits in with our global steel vision of having world class low cost assets with a global footprint. Algoma provides us with an excellent platform for the Canadian and North American markets."

According to sources familiar with the deal, the stake sale materialised after Salzgitter of Germany walked away from a potential takeover in March.

The Essar group has interests in six business areas - steel, oil and gas, power generation, shipping, communications and construction - and expects its revenues to touch $10 billion this year.

The group intends to invest around $500 million in Algoma to step up its steel shipments from the present 2.4 million tonnes per annum to four million tonnes, comprising products like hot and cold-rolled steel and plates.

In India, the Ruias operate an integrated steel plant of 4.6 million tonnes per annum, with plans drawn up to increase the capacity to an 8.5 million tonnes of flat products by 2009. The group is India's largest exporter of flat steel.

In recent months and years, Indian-owned companies led by the L.N. Mittal and the Tata group have acquired several companies in the global steel place, including Anglo-Dutch Corus by the latter for $1.8 billion.
Source: IANS
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