Billionaire brothers in rival talks to save Italian steelmaker: Sources

Apr 30 2014, 23:49 IST
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Billionaire brothers, Naveen and Sajjan Jindal, could be the answer Pope Francis is looking for. Reuters Billionaire brothers, Naveen and Sajjan Jindal, could be the answer Pope Francis is looking for. Reuters
SummaryBillionaire brothers, Naveen and Sajjan Jindal, could be the answer Pope Francis is looking for.

India's billionaire brothers, Naveen and Sajjan Jindal, could be the answer Pope Francis is looking for.

Their companies, Jindal Steel & Power Ltd and JSW Steel Ltd, are in competing talks to buy parts of insolvent Italian steelmaker Lucchini, sources with direct knowledge of the matter said.

Pope Francis earlier this month called for those in power to use their "creativity" to resolve Lucchini's problems. Italy's second-largest steelmaker has tried to sell itself for years but has so far failed to attract investors, forcing it to recently begin idling capacity and putting at risk up to 4,000 jobs.

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With Italy still struggling to emerge from its longest postwar recession and unemployment running at 13 percent, the highest level since at least 1977, the shutdown of another piece of industrial infrastructure would underline the deep problems facing the euro zone's third-largest economy.

For the Jindals, Lucchini would give them an opportunity to accelerate an expansion of their operations outside of India where steel demand growth has been soft.

And they might not even have to fork out a fraction of the $5 billion that Forbes said the Jindal family is worth; heavy liabilities and a need to protect jobs mean Lucchini could be sold for just one euro, Italian media reports say.

Formerly owned by Russia's Severstal, Lucchini was declared insolvent in 2012 and later placed under "special administration" - a procedure designed to save large firms and avoid heavy job losses. It fell victim to the 2008 recession that has cut Europe's steel demand by about a quarter.

Lucchini's main facilities include a 2.5 million-tonne-per-year steel complex in the Italian town of Piombino equipped with a blast furnace, and a wire rod mill in Lecco in the north of the country.

"Our interest is very preliminary as of now but they have some mills that look interesting," said a source at Jindal Steel. "I don't think we will be too keen on their blast furnace."

A second Jindal Steel source confirmed the company's interest in the Lucchini facilities.

JSW too is looking at the properties and its senior management could visit Italy next week, a company source and an industry source told Reuters.

Mirko Lami, of Italian union CGIL FIOM, said that they have been informally notified by Lucchini's special administrator Piero Nardi about a meeting between JSW, Lucchini, the

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