The world's largest steel company Arcelor Mittal will have to
offer a higher price of its 38 percent stake in China's Laiwu Steel
Corporation, after the country's regulatory authority refused to
approve the current offer, the China Securities Journal
reported on Tuesday.
The National Development and Reform Commission said Arcelor had
underestimated the value of Laigang Group, the controlling
shareholder of Laiwu Steel.
"The scheme for equity transfer is so far still under
examination by related government authorities," said an unnamed
source with Laigang Group, insisting that commission's response is
part of normal procedures and confirming that Laiwu Steel is still
in talks with Arcelor Mittal.
Arcelor China Holdings (Luxemburg) inked the purchase contract
with Laigang Group on February 24, 2006 to buy 38.41 percent of
Laiwu Steel's equity at 5.888 yuan (about US$0.736) per share.
The Shanghai-listed Laiwu Steel closed at 13.34 yuan on
Monday.
Arcelor will own 37.326 percent of Laiwu Steel according to
amendments to the original purchase contract, making the two
parties the company's largest shareholders.
The two parties signed a supplementary agreement this January to
extend the equity purchase contract to September 30, 2007, more
than eight months after the submission of the deal to the
government authority.
China's steel industry is currently restructuring to consolidate
the sector's productivity.
Under the NDRC's development policy, the country's top ten
producers are expected to produce half of China's steel by 2010,
and 70 percent by 2020.
Reports have said that Laigang Group may merge with another
steel manufacturer in the region to form a giant company with an
annual output of over 20 million tons in east China's Shandong
Province.
(Xinhua News Agency March 14, 2007)