KOLKATA: The steel industry, it seems, is set to witness another acquisition. If the takeover of Posco, the world’s third-largest steel maker, by No 1 Arcelor Mittal happens, it will be the mother of all mergers in the industry.
Decibel levels on such merger have been rising, ever since a meeting between Roland Junck, management board member of Arcelor Mittal, and Posco chief executive Lee Ku-taek last month.
A South Korean daily has reported that the two discussed mergers and acquisitions and Arcelor Mittal was readying a hostile bid for the Korean steel giant.
Posco has issued a denial that there was any takeover bid, hostile or otherwise.
But it has confirmed consolidation talks were triggered by the Mittal Steel takeover of Arcelor last year and later of Corus by Tata Steel Since then, Posco has been well aware that, with its very fragmented foreign shareholding, it could be a prime target for a takeover bid.
No single shareholding in Posco is more than 5%. The company has already set in motion an elaborate cross-holding alliance with other steel producers to insulate itself from hostile takeovers.
For one, Nippon Steel, Japan, has recently concluded increasing its stake in Posco from 2% to 5%, while Posco has upped its stake in Nippon Steel to 3.8%. Mitsubishi Metal is also reportedly considering a stakeholding in Posco.
An Arcelor Mittal official said that the company policy was not to comment on speculation or strategic planning while acknowledging that the world’s largest steel producer has been advocating consolidation of capacities, but this need not always be through M&As.
But a merger can lead to a major re-alignment of steel production bases in India, with both Arcelor Mittal and Posco already committed to big-ticket investments. Posco is setting up a 12-million-tonne per annum plant at an investment of $12 billion.
Arcelor Mittal has signed up for investing Rs 20,000 crore for a production base of 10 million tonnes in Jharkhand and another agreement in Orissa for a second project of identical size and investment. Clearly, the merger of the giants will force a re-look at the economics of these three projects — all in neighbouring states.
Feeling steel
A meeting between two high level officials from the two companies triggered takeover talks Posco has already got into the act by a cross-holding alliance with other steel producers Nippon Steel has recently concluded increasing its stake in Posco from 2% to 5%
source : DNA
Decibel levels on such merger have been rising, ever since a meeting between Roland Junck, management board member of Arcelor Mittal, and Posco chief executive Lee Ku-taek last month.
A South Korean daily has reported that the two discussed mergers and acquisitions and Arcelor Mittal was readying a hostile bid for the Korean steel giant.
Posco has issued a denial that there was any takeover bid, hostile or otherwise.
But it has confirmed consolidation talks were triggered by the Mittal Steel takeover of Arcelor last year and later of Corus by Tata Steel Since then, Posco has been well aware that, with its very fragmented foreign shareholding, it could be a prime target for a takeover bid.
No single shareholding in Posco is more than 5%. The company has already set in motion an elaborate cross-holding alliance with other steel producers to insulate itself from hostile takeovers.
For one, Nippon Steel, Japan, has recently concluded increasing its stake in Posco from 2% to 5%, while Posco has upped its stake in Nippon Steel to 3.8%. Mitsubishi Metal is also reportedly considering a stakeholding in Posco.
An Arcelor Mittal official said that the company policy was not to comment on speculation or strategic planning while acknowledging that the world’s largest steel producer has been advocating consolidation of capacities, but this need not always be through M&As.
But a merger can lead to a major re-alignment of steel production bases in India, with both Arcelor Mittal and Posco already committed to big-ticket investments. Posco is setting up a 12-million-tonne per annum plant at an investment of $12 billion.
Arcelor Mittal has signed up for investing Rs 20,000 crore for a production base of 10 million tonnes in Jharkhand and another agreement in Orissa for a second project of identical size and investment. Clearly, the merger of the giants will force a re-look at the economics of these three projects — all in neighbouring states.
Feeling steel
A meeting between two high level officials from the two companies triggered takeover talks Posco has already got into the act by a cross-holding alliance with other steel producers Nippon Steel has recently concluded increasing its stake in Posco from 2% to 5%
source : DNA