ArcelorMittal, the world’s biggest steel group, is preparing to take full control of its South African subsidiary in a $5bn deal, FT Alphaville has learnt.
The Luxembourg-based company, of which the Indian billionaire Lakshmi Mittal is the chairman and controlling shareholder, is planning to make an offer for the 48 per cent of ArcelorMittal South Africa it does not already own.
It first has to win support from local investors under South Africa’s Black Economic Empowerment procedures, work on which is believed to be on-going.
Arcelor is prepared to bid up to 210 rand-a-share to buy out minority holders. Shares in AMSA, which are listed on the Johannesburg stock exchange, were up 3 per cent at 157 rand on Friday, giving the company an equity value of $8.3bn
While some sources suggested Arecelor was ready to move as early as next week – despite the turmoil in financial markets — a spokeperson for the parent company in London said:
We have been looking at a BEE solution for some time as far as ArcelorMittal South Africa is concerned. While this is true, the company has not taken any decision as to specific timing of such a BEE transaction.
AMSA is the largest steel producer on the African continent, producing 6.4m tonnes of liquid steel per annum.
In July, the company reported a 45 per cent rise in first half earnings and forecast strong third quarter profits as demand and prices remained robust.
South Africa, the continent’s largest economy, is improving roads, railways and ports to support growth. Sport stadiums and other infrastructure are also being built before the 2010 soccer World Cup.
In January, Enrico Reato resigned as chief executive of AMSA to take up a position at the parent company.
Shares in AMSA – like of the steel sector – have been under intense pressure in recent months, falling about 35 per cent since June. cent.