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ArcelorMittal Enters Cooperative Agreement with China Oriental Group

12/10/2007 - ArcelorMittal enters into a Business Cooperation Agreement with China Oriental Group and its subsidiaries regarding shareholdings and management of the company.

ArcelorMittal has entered into a Business Cooperation Agreement with China Oriental Group Co. Ltd. and its subsidiaries (the Group). ArcelorMittal also entered into a Shareholders' Agreement with the controlling shareholders of China Oriental regarding their shareholdings and management of the company. The agreements will allow ArcelorMittal strengthen its position in China’s fast-growing steel market.
 
Under the business cooperation agreement, ArcelorMittal will share technology, technical expertise and know-how with the aim of transforming the China Oriental Group into a leading producer of heavy sections in China. ArcelorMittal will also assist the Group in sourcing iron ore and coal.
 
“We have made no secret of our wish to participate more actively in the China’s fast-growing steel market, and the agreements we have signed are a major step forward in delivering that strategy,” said Lakshmi Mittal, ArcelorMittal’s President and CEO. “Not only will this strengthen our position in China, it will also provide the China Oriental Group with the expertise and experience it needs to become a leading producer of heavy sections in China.”
 
“Part of ArcelorMittal's growth over the years has been through strategic acquisitions and subsequently creating value through active management of the companies acquired,” continued Mittal. “I am confident that these agreements will be further examples of how ArcelorMittal adds value through the provision of technology and technical know how, training, financial management, mergers and acquisitions, supply chain management and marketing as well as sustainable and resource efficient production.”
 
“ArcelorMittal becoming the company's second-largest shareholder and the signing of the Business Cooperation Agreement well reflect its confidence in the potential of China Oriental's operations, as well as in the market in Mainland China,” said Han Jingyuan, China Oriental’s Chairman and CEO. “We are delighted to have the world's leading steel company as our strategic partner. I believe with ArcelorMittal's support in steel production technology, its network of worldwide raw material sourcing and financial management expertise, China Oriental can expedite its development and the realization of its plan to become a world-class leading H-section steel production base in the PRC,” said Jingyuan.
 
ArcelorMittal intends to make a general offer for the company in line with HK Stock Exchange regulation. The offer price will be no less than HK$6.12 per Share, being the price at which a 28.02% stake in China Oriental was purchased by ArcelorMittal from Ms Chen Ningning. ArcelorMittal also intends to maintain the listing of China Oriental after the close of the general offer.
 
ArcelorMittal is the world's largest steel company, with 320,000 employees in more than 60 countries. The company leads a number of major global markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks. An industrial presence in 27 European, Asian, African and American countries exposes the company to all the key steel markets, from emerging to mature, positions it will be looking to develop in the high-growth Chinese and Indian markets. ArcelorMittal’s key pro forma financials for 2006 show combined revenues of USD 88.6 billion, with a crude steel production of 118 million tonnes, representing around 10% of world steel output.
 
Listed on March 2, 2004, the China Oriental Group is one of China's most efficient iron and steel producers. Its production plant is located in Hebei Province, one of the provinces with the richest iron ore reserves in China, and with close proximity to deep-water ports and railways. The Group's products are mainly sold in China to downstream iron and steel manufacturers, in Northern China. The Group further processes its billets and strips into downstream steel products primarily for use in the construction and machinery manufacturing industries. China Oriental is also engaged in the production of other downstream products such as cold rolled sheets, galvanized sheets, and H-section steel.