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ArcelorMittal Seeks Joint Control of Indian Re-roller

09/08/2009 - ArcelorMittal announced its intention to launch a tender offer on September 7 for the acquisition of 29.4% shares in Uttam Galva Steels Ltd., a Western India-based producer of cold rolled steel, galvanized products (plain and corrugated), and color coated coils and sheets.

ArcelorMittal announced its intention to launch a tender offer on September 7 for the acquisition of 29.4% shares in Uttam Galva Steels Ltd., a Western India-based producer of cold rolled steel, galvanized products (plain and corrugated), and color coated coils and sheets. The company is listed on the major stock exchanges of India.
 
The price offered is Rs. 120 per share, a 27% premium over the two weeks volume weighted average and of 85% over the six-month volume weighted average. The transaction value for 35% stake is Rs. 5 billion (approximately USD 103 million), implying an estimated enterprise value of Rs. 28 billion (about USD 560 million).
 
ArcelorMittal signed a share purchase agreement with the existing promoter, R K Miglani family, on September 3 for the acquisition of 5.6% shares in the company. On September 4, ArcelorMittal signed a co-promotion agreement with R K Miglani family and company to become a co-promoter and to obtain broad joint control rights. 
 
Subject to 29.4% of shares being tendered in the offer, ArcelorMittal will hold 35% of the equity in Uttam Galva. The completion of both these agreements is subject to customary approvals.
 
“This transaction will provide ArcelorMittal with its first major manufacturing presence in India,” said Sudhir Maheshwari, Member of the Group Management Board of ArcelorMittal. “The Miglani family has built a highly regarded quality company and we look forward to further developing the company in partnership with them. The Uttam Galva alliance will be an important component of our overall strategy for India, a country where ArcelorMittal aspires to become an integrated producer of the highest quality steel.”
 
Uttam Galva has its main operating facility in Khopoli near Mumbai and has 1400 employees. The company supplies to customers in the automobile, white good, construction, and general engineering sectors. For the year that ended March 31, it shipped 630,000 MT of products and its service centers processed 380,000 MT, leading to a turnover of INR 44 billion (USD 890 million) and net profit after tax of INR 1 billion (USD 21 million).
 
ArcelorMittal is the world's leading steel company, with operations in more than 60 countries. It is a leader in all major global steel markets, including automotive, construction, household appliances, and packaging, with sizeable captive supplies of raw materials and outstanding distribution networks. With an industrial presence in more than 20 countries spanning four continents, the company covers all of the key steel markets, from emerging to mature. In 2008, ArcelorMittal had revenues of $124.9 billion and crude steel production of 103.3 million tonnes, representing about 10% of world steel output.