Lakshmi Mittal moves to take over Iscor

Friday, 26 December 2003, 08:00 Hrs
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JOHANNESBURG: London-based steel magnate Lakshmi Mittal has sought permission from South African authorities to secure a controlling stake in the country's former state-owned steel giant Iscor.

The regulatory body, the Competitions Commission, said that Mittal's company LNM had advised it of a planned merger that would result in LNM acquiring a controlling interest of more than 50 percent in Iscor.

The news came even as analysts here suggested that Mittal has probably been acquiring Iscor shares in the last few days after he received a 613 million rand payout from Iscor last week in terms of a business assistance agreement with which LNM had helped turn around the fortunes of the ailing Iscor.

One analyst said trading in Iscor shares had been particularly heavy in the last week, with over nine million Iscor shares traded during the past 10 days alone.

"This would be consistent with Mittal having entered the market to bring his stake in Iscor to just under 50 percent, where he will have to stay until the competition authorities give him the authority to take control of Iscor - assuming of course that their decision is a positive one," an analyst told the daily Business Day here.

The decision will be a difficult one for the Competitions Commission, as the South African government had earlier indicated that it was not keen for a strategic asset like Iscor to fall into foreign ownership.

Mittal however had, during an earlier bid to buy out minority stakeholders, indicated that he would not take his stake beyond 60 percent without making a full offer to minorities.

If Mittal gets the approval from the commission, it would not take him too long to reach the 60 percent mark, effectively marking the end of Iscor being listed as a local company.

In a move that surprised analysts last week, Mittal received the cash payout from Iscor rather than a tranche of shares in terms of the business assistance agreement. The agreement saw LNM help Iscor save 388 million rands through the introduction of technologies and access to greater markets.

If LNM had accepted the five percent shares in Iscor instead, its stake would have jumped from 47 to 52 percent instantly.

The preference for cash is believed to have given Mittal the opportunity to buy up more Iscor stock in preparation for a commission decision.

Securities Exchange regulations will oblige LNM to issue a statement if this has been the case, including the prices the firm has been paying for Iscor shares.

Even as the LNM bid continues, Iscor has been aggressively embarking on an acquisition trail locally. It has targeted steel processing mill Duferco and the only other major steel group in South Africa, Highveld Steel.

The Competitions Commission is certain to consider these as critical factors in the application by Mittal.

The commission said it would need to be notified of a change of control in Iscor, after which it would examine the application by LNM.

Source: IANS
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