Mumbai: The founders of Uttam Galva Steels Ltd will sell shares to ArcelorMittal if the world’s largest steel maker’s open offer to boost its stake in the Indian producer fails.
The shares closed up 9.98% to Rs125.05 on the Bombay Stock Exchange, the highest in at least 18 years, after ArcelorMittal acquired 5.6% stake. That’s 4% more than Rs120 apiece offered by ArcelorMittal to buy an additional 29.4% stake in the Mumbai-based Uttam Galva.
The surge in Uttam Galva’s stock on Monday may make the offer unattractive to individual shareholders, said company director Ankit Miglani. His family, founders of Uttam Galva, will sell additional shares to ArcelorMittal should the offer to minority shareholders fail. “This acquisition is a reinforcement by the Mittals that the market is very strong,” Miglani said in a phone interview on Monday. “It is also a restart of their consolidation process.”
ArcelorMittal and the Miglani family will own an equal share in the company after the open offer, Miglani said.
ArcelorMittal’s first Indian acquisition may help its India-born chief executive officer Lakshmi Mittal benefit from surging demand for the alloy in Asia’s third biggest economy. India’s steel demand is forecast to gain 10% in this fiscal, the steel ministry said.
ArcelorMittal signed an agreement with the Miglani family on 3 September to buy a 5.6% stake, the company said the same day. The family owns 45.6% of Uttam Galva, Miglani said.