Arcelor, Nippon Steel Join Forces to Bid for Insolvent Essar
The joint acquisition by Arcelor and Nippon Steel depends on their plan being selected and accepted by the courts.
(Bloomberg) -- The world’s biggest steelmaker, ArcelorMittal, and Japan’s top mill will form a partnership to bid for Essar Steel India Ltd., the insolvent producer that could fetch at least $6 billion.
Arcelor and Nippon Steel & Sumitomo Metal Corp. said in a statement they have joined the bidding for Essar, which is on the block after entering an Indian government-mandated process designed to clean-up companies that can’t repay their debts.
Luxembourg-based Arcelor will be the majority partner, Kosei Shindo, president of Nippon Steel, said at a briefing in Tokyo, describing the venture as “almost 50:50.” He said the bidders want to target demand from the construction industry, which is set benefit from a massive infrastructure push by India’s government that could triple the nation’s steel capacity.
The joint acquisition by the companies depends on their plan being selected and accepted by Indian courts. Essar is the largest distressed steelmaker being sold under the program, and is also the subject of a bid from Russia’s state-controlled VTB Group.
Arcelor and Nippon Steel have operated joint ventures in America going back to 1987, and partnered on another U.S. purchase in 2014. In the statement, Lakshmi Mittal, Arcelor’s chief executive officer, promised a “rapid turn-around in Essar’s performance,” citing “a rich history of positive collaboration” with the Tokyo-based company.
Advisers evaluating offers for Essar had recommended last month that both Arcelor and VTB should be disqualified after querying whether they met the bidding criteria.
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