Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/article/?id=308103&type=Business
Arcelor plans to raise stake in Hunan mill
Created: 2007-3-7, Updated: 2007-3-6 23:16:30
Author:Fu Chenghao
ARCELOR Mittal, the world's top steel maker, could increase its stake in China's Hunan Valin Steel Tube & Wire Co to one-third, according to a stock exchange filing yesterday.
Arcelor Mittal, which owns 29.5 percent in Valin, could enlarge its stake to 33.3 percent after acquiring 49.3 percent of the 520 million new shares offered in a private placement by Valin, based in Changsha, Hunan Province.
The balance of the share offer will be taken by Valin's state-owned parent, Valin said in a statement to the Shenzhen Stock Exchange.
After the announcement, Valin's shares rose the maximum allowable 10 percent to 6.09 yuan (78 US cents). A final price for the new stock hasn't been determined, but it should be no less than 4.47 yuan, valuing the sale at least 2.3 billion yuan, Valin said.
"The price is good for Mittal Arcelor," said Citic Securities analyst Zhou Xizeng. "And Valin needs the funding to help buy more assets from its parent to bolster the value of the listed arm."
Valin said it will use the new capital to buy stakes in several subsidiaries from its parent as well as to build facilities to boost steel plate capacity and cut pollution.
The sale is subject to state approval.
Mittal Steel Co bought a 36.7 percent stake in Valin in 2005, prior to its merger with Arcelor SA to create the world's largest mill. Its stake was later diluted to 29.5 percent after Valin converted its non-tradable state shares into tradable equities under a nationwide stock reform program.
Meanwhile, Baotou Iron & Steel Group, based in the Inner Mongolia Autonomous Region, said it had failed to conclude a deal to sell up to a 49 percent stake to Arcelor, and talks had ended.
Arcelor earlier agreed to buy a 38.4 percent stake in China's Laiwu Steel Corp. But the two had to extend the terms of their agreement after failing to receive government approval for more than a year.
China's policies bar overseas companies from acquiring a controlling stake in domestic steel mills.
Arcelor Mittal, which owns 29.5 percent in Valin, could enlarge its stake to 33.3 percent after acquiring 49.3 percent of the 520 million new shares offered in a private placement by Valin, based in Changsha, Hunan Province.
The balance of the share offer will be taken by Valin's state-owned parent, Valin said in a statement to the Shenzhen Stock Exchange.
After the announcement, Valin's shares rose the maximum allowable 10 percent to 6.09 yuan (78 US cents). A final price for the new stock hasn't been determined, but it should be no less than 4.47 yuan, valuing the sale at least 2.3 billion yuan, Valin said.
"The price is good for Mittal Arcelor," said Citic Securities analyst Zhou Xizeng. "And Valin needs the funding to help buy more assets from its parent to bolster the value of the listed arm."
Valin said it will use the new capital to buy stakes in several subsidiaries from its parent as well as to build facilities to boost steel plate capacity and cut pollution.
The sale is subject to state approval.
Mittal Steel Co bought a 36.7 percent stake in Valin in 2005, prior to its merger with Arcelor SA to create the world's largest mill. Its stake was later diluted to 29.5 percent after Valin converted its non-tradable state shares into tradable equities under a nationwide stock reform program.
Meanwhile, Baotou Iron & Steel Group, based in the Inner Mongolia Autonomous Region, said it had failed to conclude a deal to sell up to a 49 percent stake to Arcelor, and talks had ended.
Arcelor earlier agreed to buy a 38.4 percent stake in China's Laiwu Steel Corp. But the two had to extend the terms of their agreement after failing to receive government approval for more than a year.
China's policies bar overseas companies from acquiring a controlling stake in domestic steel mills.
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