Monday, March 03, 2008

Evraz enters deal to take over Chinese steel firm

Evraz Group SA, the Russian corporate owner of Rocky Mountain Steel Mills and its parent company, Evraz Oregon Steel Mills. last week announced its plans to expand into China, the world’s largest steel market.

The move received worldwide attention everywhere from Business Week and Forbes magazines to The Wall Street Journal, CNN, Reuters and business media like the United Kingdom's Financial Times.

Evraz, on its Web site, said it had entered into an agreement to buy a 10 percent stake in Singapore-listed Delong Holdings Ltd., for $2.80 per share, a price that's 30 percent more on the Singapore stock exchange.

Evraz, Russia's largest steel producer by domestic volume, has six-month options to increase the stake to 51 percent, which would obligate the mammoth company to buy out the other shareholders at the same per-share price.

"The maximum consideration payable by Evraz will be approximately $1.494 billion (U.S. dollars) assuming full acceptance of the mandatory offer, and the exercise of all outstanding warrants," Evraz officials said in a prepared statement.

Evraz is buying the shares from the controlling shareholder, Best Decade, which owns 77 percent of Bejing-headquartered Delong.

Delong Holdings Ltd., through its subsidiaries, manufactures and sells hot-rolled steel coils in China, producing products for the infrastructure, pipe-making, machinery, and automotive industries. The company also trades iron ores, as well as the importing and exporting of steel products, mineral ores, and related materials.

Delong Chairman Ding Liguo, who owns a majority stake in Best Decade, said the new Evraz association will help both companies: "Becoming part of a leading global steel maker with complementary strengths and markets, we expect to gain scale and more growth opportunities in the current highly competitive steel environment."

The Evraz announcement noted Delong's head office would remain in Beijing, and there would be no immediate management changes.

Evraz, partly owned by Russian billionaire and Chelsea, England, soccer club owner Roman Abramovich, has been expanding to markets including Africa and the U.S. Most recently, Evraz bought U.S.-based Claymont Steel Holdings Inc. located in Claymont, Del.

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