Hong Kong: ArcelorMittal, the world’s largest steel producer, informed that it has signed a deal to take over China Oriental, in its bid to make further inroads into the world’s biggest steel market.
ArcelorMittal will raise its stake to 73.13% from 28.02% of shares in the Hong Kong-listed steel maker, the two companies said in a joint statement. The move would cost around $1.0 billion (Rs3,936 crore). It will also make an offer to buy out minority shareholders.
The deal still needs the approval of the Chinese Ministry of Commerce and the State Administration for Industry and Commerce, who are yet to permit a foreign owner to take control of a large domestic producer.
The two companies were forced to show their hands after Hong Kong’s securities regulator recently ruled that ArcelorMittal had acted “in concert” with the mainland company’s chairman Han Jingyuan.
The company had quietly signed an agreement with Han to buy his shares, and the city’s Takeovers Panel found the two sides were collaborating, without consulting the regulator.
The company was therefore obliged to make an offer by 19 December to all shareholders for a price not lower than that paid for its original 28.02% stake, which cost $647 million.
Last week, ArcelorMittal said it had entered into an agreement to share its technology and technical expertise with China Oriental “with the aim of transforming the Group into a leading producer of heavy sections.”
It will also assist the Chinese firm in sourcing iron ore and coal, it said. Lakshmi Mittal, ArcelorMittal president and chief executive, said the deal would allow the company to strengthen its position in China’s fast-growing steel market.
“We have made no secret of our wish to participate more actively in the China’s fast growing steel market, and the agreements we have signed are a major step forward in delivering that strategy,” he said.