Arcelor-Mittal gains control of Chinese steel firm for first time
London, Nov.22: Arcelor-Mittal, the world’s largest steel maker, has further improved its position in the industry by becoming the first foreign company to take a controlling stake in a Chinese steel concern.
The Luxembourg-based group took a 73 per cent stake in China Oriental Group for a stake believed to be worth about 1.7 billion pounds (€1.1 billion), according to Hong Kong stock exchange documents.
China Oriental’s main asset is a mid-sized steel mill in the north of the country that produces four million tonnes a year. It is both privately owned and listed outside the mainland, a rarity in Chinese business ethics.
According to the Financial Times, the deal furthers the ambition of Lakshmi Mittal, ArcelorMittal’s chief executive and main owner, to secure a strong foothold in China, the world’s biggest producer and consumer of steel.
Arcelor-Mittal, which makes three times as much steel as its three closest rivals combined – has had a strong position in most regions that have large steel industries, but not China.
China has so far not allowed foreign control of any Chinese steel maker on the grounds that steel is a strategically important sector. Arcelor-Mittal is unlikely to publicise the deal immediately because it will want more time to convince China’s steel market regulators that the transaction will be in the country’s interest.
In the past Arcelor-Mittal’s plans in China have been hampered by Beijing’s block on ownership by foreign companies. Its efforts to buy a 38 per cent stake in Laiwu Steel, the country’s ninth largest producer, have been stalled pending regulatory approval for more than a year.
ArcelorMittal made its latest move by buying shares in a Bermuda-based company that is listed on the Hong Kong stock exchange and less subject to the control of the Beijing government than companies in Mainland China.
“This has been a clever piece of work by ArcelorMittal’s mergers and acquisitions team,” a person knowledgeable about the deal said.
Neither China Oriental nor ArcelorMittal wanted to comment. (ANI)
