Saturday, Jul 16, 2005
Mittal buys stake in Chinese steel firm
Largest foreign acquisition of China's A-share enterprises
CHANGSHA: The world's largest steel conglomerate Mittal Steel Co. is to become the second largest stockholder of a steel company located in central China's Hunan Province.
The State Development and Reform Commission (SDRC) on Thursday approved the proposal of Mittal Steel to purchase 36.673 per cent of stocks from the Hunan-based Valin Iron and Steel Co. Ltd. at a price of 2.7915 billion yuan (about $338 million). Valin will hold 37.673 per cent of the joint venture's stock.
The state-owned Valin, listed on the Shenzhen Stock Exchange, will hand over 30 per cent of the sale proceeds to the central finance and use the balance money mainly to adjust and upgrade its product mix, said Valin sources. The deal not only marks the largest foreign acquisition of China's A-share enterprises but also makes Valin the first Chinese steel company to be embedded in the network of a global iron and steel giant through stock trading.
According to the arrangement made by the two sides, Mittal will provide support to Valin in fields such as technological development, management and marketing. The multinational group also committed to supply Valin with three million tonnes of iron ore in the first year after the joint venture is established and increase the amount subject to the latter's actual demand.
Valin produced 7.13 million tonnes of steel last year, with revenues worth of 26.2 billion yuan (about $3.18 billion). — Xinhua
Copyright © 2005, The Hindu.