Steel giant ArcelorMittal will buy 35 per cent stake for Rs 500 crore in the Indian secondary steel producer, Uttam Galva Steels, to become the co-promoter of the company.
Both the companies have already signed a share purchase agreement under which ArcelorMittal will buy 5.6 per cent stake from the present promoters of Uttam Galva, RK Miglani family. The rest of the 29.4 per cent will be picked from the stock market through an open offer to be launched on September 7 by ArcelorMittal.
The open offer will be priced at Rs 120/share. The deal estimates the enterprise value of Uttam Galva Steels at Rs 2,800 crore.
Sudhir Maheshwari, member of the group management board of ArcelorMittal, said, "This transaction will provide ArcelorMittal with its first major manufacturing presence in India. The Uttam Galva alliance will be an important component of our overall strategy for India, a country where ArcelorMittal aspires to become an integrated producer of the highest quality steel."
Investment in Uttam Galva gives an opportunity to ArcelorMittal to take the first steps to enter the Indian steel business.
Steel baron, LN Mittal’s ArcelorMittal had announced plans to set up 24 million tone steel plant in the states of Jharkhand and Orissa with over $20 billion investment, making it the largest foreign direct investment promised to India. But, the roadblocks in land acquisition and allocation of iron ore mines have delayed the company’s plans in India with very little success till date.
This is the first investment in the steel assets in India by the world’s largest steel producer, ArcelorMittal. Uttam Galva Steel, which produces 0.9 million tones of value added steel is a secondary steel player in India.
Sources say Uttam Galva has ambitions of venturing into the production of higher grades of value added steel in the cold rolled and galvanised steel category and the co-promoter ArcelorMittal is expected to bring the technical expertise to the table.
Both, ArcelorMittal and Uttam Galva Steel are under a Non Disclosure Agreement and have not commented on the deal. Ahead of the announcement, Uttam Galva Steel’s stock closed at it’s all time high of Rs 113.70/share, up 9.96 per cent on Friday. The stock rose by 92.7 per cent since August 1.
S:NP
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