ArcelorMittal forms JV with Nippon Steel to acquire Essar Steel
5 March 2018
Lakshmi Mittal-led ArcelorMittal has announced a joint venture with Japanese steel major Nippon Steel and Sumitomo Corporation to acquire Essar Steel in India, after its Indian subsidiary ArcelorMittal India Pvt. Ltd submitted a resolution plan on February 12.
Hence, going forward, if the ArcelorMittal bid is selected, both companies will jointly acquire the Ruia family's steelmaking asset in Gujarat.
"Partnering with NSSMC for Essar Steel has always been our intention and adds further strength to our offer," chairman of ArcelorMittal, Lakshmi Mittal said in a statement. "We believe that together we can contribute our technology and knowledge to support a rapid turnaround 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 if its economy," the statement added.
ET had reported in late January that the two global steel giants will be jointly bidding for Essar Steel.
The two companies have been partners for the last thirty years for two JVs in the US that produce high value-added downstream products which serve the automotive and domestic appliance markets.
More recently, in 2014, ArcelorMittal partnered with NSSMC to acquire AM/NS Calvert, a downstream finishing facility in Alabama in the US.
ArcelorMittal along with the Ruia-backed Numetal have emerged as the lead bidders for Essar Steel after both submitted a bid on the February 12 deadline. Numetal, on the other hand is a special purpose vehicle (SPV)in which leading Russian bank VTB Capital is the largest shareholder. Other partners include Tyazprom Export (TPE) of Russia and the Ruias. TPE is a construction engineering and management consulting company that specialises in steelworks.
Both the bids are now being reviewed by the resolution professional Satish Gupta's legal advisors for their eligibility.
Essar Steel owes Rs 54,851 crore to financial creditors and Rs 22,914 to operational creditors, taking its total claims to almost Rs 78,000 crore.