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Business News/ Companies / News/  JSW Steel offers less than $100 million for Lucchini’s three mills
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JSW Steel offers less than $100 million for Lucchini’s three mills

The deal would not involve taking on any debt from the bankrupt company and would not require fund-raising

A file photo of Sajjan Jindal, chairman and managing director of JSW Steel. Photo: Abhijit Bhatlekar/MintPremium
A file photo of Sajjan Jindal, chairman and managing director of JSW Steel. Photo: Abhijit Bhatlekar/Mint

Mumbai: JSW Steel Ltd has offered less than $100 million for three mills of Italy’s Lucchini SpA, the head of the company said on Monday, and analysts said it was an attractive strategic move.

“We have given a binding bid to Lucchini and they are approaching the Italian government as they have some process which they have to complete," Sajjan Jindal, chairman and managing director of JSW Steel, told reporters on the sidelines of an event. “It coming out of bankruptcy and we will acquire it if it is approved by the government." Jindal said theirs was the “best place" amongst the bidders and that by the end of the calendar year, the company hopes to start operating the mills.

JSW was the only interested bidder for Lucchini’s Piombino plant for the three mills of Lucchini, Mint reported on 15 July. “It is sub-$100 million... it is much lower than that," Jindal said when asked for the amount of the bid, adding that the bid is for the rolling mills—the rail, bar and wire rod mills with a capacity of about a 1.2 million tonnes (mt).

The bid looked like a good deal for the company as it has exports to Europe, analysts said. “It was supposed to be a distress sale, but 600 crore is an attractive and positive deal," said Goutam Chakraborty, metal analyst at Emkay Global Financial Services Ltd. “He is already taking steel there. This could be like an intercompany shipment."

The semi-finished steel will be get a processing base in Europe at Lucchini and save costs for the company when it sells to its clients there, said another analyst who declined to be named.

Jindal said at present Lucchini’s blast furnace is being shut down but there is a chance JSW Steel will run the blast furnace in the future with new and environment friendly technology. “To acquire the facility is not a great deal of investment but I think we will have to invest in new technology, then we could call for a large investment," Jindal added. “It may cost us some money but the learning will be enormous." JSW Steel does not have to take on any debt and the deal won’t involve any fund-raising, he said.

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Published: 15 Sep 2014, 01:51 PM IST
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