ArcelorMittal, the world?s largest steel manufacturer, on Wednesday said that the company expects to purchase an additional 4.9% stake in Uttam Galva from the promoter RK Miglani family in due course. This will take the steel major?s holding in the domestic company to 33.7%. ArcelorMittal closed its tender offer on January 7, 2010, when it acquired a 28.8% stake in Uttam Galva , a producer of cold rolled steel and galvanised products.
ArcelorMittal in September last year entered into an alliance with the Miglani family and signed a share purchase agreement with the existing promoter RK Miglani family for the acquisition of 5.6% shares in the company. This transaction provided ArcelorMittal with its first major manufacturing presence in India.
Reacting to the news, Uttam Galva stocks on Wednesday hit a high of Rs 123.50 during the day. The stock closed at Rs 112.70, up 6.32%, on the Bombay Stock Exchange.
Repeated calls made to Ankit Miglani, director- commercial, Uttam Galva, went unanswered. However, he was quoted by a television channel as saying, ?The original open offer was at 29% but because certain convertible bonds were converted, it has changed the underlying equity structure. So now it is 28.8% and the promoters are selling 4.9% after a share purchase agreement. This is the part of the original acquisition, not an additional one.?
ArcelorMittal in a statement said its has successfully completed its tender offer for a 28.8% stake in Uttam Galva Steels and will now purchase an additional 4.9% from the Miglani family, the majority owners of the Indian reroller.
When asked whether the Luxembourg-based steelmaker has plans to increase its stake in Uttam Galva, Aditya Mittal, the company?s chief financial officer, said: ?We have just completed our stake purchase and are satisfied,?
Mittal was speaking during a conference call regarding ArcelorMittal?s fourth quarter results.
Mittal said ArcelorMittal continues to assess how the company can grow and strengthen its cooperation with Uttam Galva but said there were no plans to announce a further increase in its Uttam Galva equity stake.
In what is seen as a desperate move by ArcelorMittal to enter India, experts believe in the long run, this might turn into Uttam Galva?s complete acquisition by ArcelorMittal.
?Indian steel markets are likely to offer good prospects in long term but the risks in large greenfield scale projects are enormous??from land acquisition to statutory clearances to raw material securities. Hence, an operational asset may be better suited for acquisitions,? said a metal analyst.