SAIL-Posco JV on rocks over share
Though more than five years have passed since the idea of having a JV was first mooted, the project has failed to take off due to the rigid stand taken by the two sides over equity sharing in the proposed entity. POSCO wants a majority (51%) stake in the JV as it wants control over a venture that would use its patented FINEX technology. The South Korean company is also looking for similar ventures in other markets such as China, and its management has told the steel ministry that the company could come under pressure for similar “concessions” there too that would be unacceptable. SAIL, on the other hand, wants a 50:50 JV as it feels that the venture is equally supported by both companies and it would allow the PSU to convince its shareholders.
“There is no point dragging it on for too long. None of the partners wants to budge from their stands to have a minority stake in the company,” said an official on condition of anonymity.
“Even though SAIL seems to be fine with a 50:50 equity sharing, Posco is adamant on 51:49,” the official said.
The officials said that though both Japanese and South Korean companies are tough to negotiate with, SAIL's experience with Japan's Kobe Steel was without much issues. “In comparison, it has been an uphill task to be able to convince the Koreans for equal stake sharing. Let's see if something can be worked out before the expiry of the MoU,” said a source.
Be the first to comment.