ArcelorMittal SA said on Friday its India unit would form a joint venture with Japan's biggest steelmaker Nippon Steel & Sumitomo Metal Corp to buy Indian steelmaker Essar Steel India Ltd, which is undergoing bankruptcy proceedings.
The world's largest steelmaker, ArcelorMittal SA, said on Friday its India unit would form a joint venture with Japan's biggest steelmaker Nippon Steel & Sumitomo Metal Corp to buy Indian steelmaker Essar Steel India Ltd, which is undergoing bankruptcy proceedings.
ArcelorMittal unit ArcelorMittal India Pvt Ltd submitted a plan to India's National Company Law Tribunal, which deals with insolvency and company disputes, on February 12 to bid for Essar Steel in partnership with Nippon Steel.
“Should the submitted Resolution Plan be selected and formally accepted by India’s National Company Law Tribunal, ArcelorMittal and NSSMC would jointly acquire and manage Essar Steel,” ArcelorMittal said in a statement.
“Partnering with NSSMC for Essar Steel was always our intention and adds further strength to our offer. Combining our experience and expertise creates a powerful partnership that has a proven track record - our rich history of positive collaboration dates back more than 20 years with three joint ventures in the US,” ArcelorMittal Chairman and CEO Lakshmi Mittal said.
“We believe that together we can contribute our knowledge and technology to support a rapid turn-around in Essar’s performance, enabling it to increase production, enhance its product capabilities and make a meaningful contribution to the future growth of India’s manufacturing sector and the development of its economy,” he said.
Kosei Shindo, president of Japan's biggest steelmaker, said if the joint venture's bid to acquire Essar Steel succeeds, it would help Nippon Steel tap into the Indian market "where steel demand is expected to grow sharply in the mid- and long-term" and be a key growth driver for the company.
Shindo, speaking to reporters in Tokyo after unveiling its new three-year business plan, said ArcelorMittal will take a majority stake in Essar Steel, but should not be much higher than Nippon Steel's interest, declining to give further details on the joint venture.
ArcelorMittal and Nippon Steel have a history of forming joint ventures, with the oldest dating back to 1987, and the most recent one happening in 2014.
Nippon Steel collaborates with Tata on automotive steel in India and their relation would not change after the possible purchase of Essar, he said.
In February, ArcelorMittal and a group led by Russia's VTB made separate bids for Essar Steel, which faces claims of nearly $8 billion from banks and other creditors and suppliers.
At the time, ArcelorMittal offered a "detailed industrial plan" for Essar Steel, aimed at improving its performance and profitability.
Essar Steel was among a dozen of India's biggest debt defaulters that were pushed to bankruptcy court last year after a central bank order aimed at clearing $147 billion in bad loans at the nation's banks choked lending.
(With agency inputs)
