New Delhi: After much hyped acquisitions by Mittal and Tatas, Ruias also joined the fray with Essar Steel on Monday announcing that they have agreed to acquire Canadian Algoma Steel.
Algoma Steel is an integrated steel producer based in Sault Ste Marie, Ontario with steel shipments of 2.4 million tonnes in 2006.
It has a revenue of Canadian Dollars 1.9 billion which are primarily derived from the manufacture and sale of rolled steel products, including hot and cold rolled steel and plate.
It is agreed that Ruias owned Essar Steel will acquire Algoma Steel for an aggregate value of Canadian Dollars 1.8 billion (approx $1.58 billion) to be paid in cash.
The offer price of Canadian Dollar 56 per share represents a premium of 48 per cent to Algoma's stock price for the 20-day period ending on February 14, 2007 when Algoma confirmed that it was in discussions regarding a potential transaction, a joint statement by the two companies said.
The arrangement must be approved by Algoma's shareholders by the affirmative vote of at least 66 per cent (2/3rd) of the votes cast, in person or by proxy, at a shareholders meeting, and is subject to customary closing conditions including necessary regulatory approvals.
As quoted by PTI, Essar Global Ltd Chairman Shashi Ruia, commenting on the deal said, "We believe Algoma is an excellent addition to our existing steel business and also offers growth potential. This acquisition fits in with our global steel vision of having world class low cost assets with a global footprint."
Benjamin Duster, Chairman of Algoma's Board of Directors said, "The Board of Directors unanimously supports the Essar proposal as it reflects a significant premium to the historical share price of Algoma."
UBS investment bank is acting as exclusive financial adviser to Essar and sole arranger of Essar's transaction financing. Genuity Capital Market is acting as exclusive financial adviser to Algoma.
The investment was made through the Essar Group's overseas investment arm – Essar Global through its wholly-owned subsidiary, Essar Steel Holding Ltd.
The support agreement of the deal provides for payments to Essar in the event that the acquisition is not completed under certain circumstances.
Algoma expects the shareholders meeting to approve the arrangement will be held in June and the acquisition will be completed shortly thereafter if approved by the shareholders.
"The Board of Directors of Algoma has unanimously recommended that Alogma shareholders vote in favour of the transaction," the statement said.
Ruia said Algoma will provide Essar an excellent platform for the Canadian and North American market.
"We are impressed with Algoma's management team and look forward to working with them to enhance our industrial leadership," he said.
Essar Global, an international conglomerate, operates in six business areas – steel, oil and gas, power, communications, shipping and logistics and construction.
Shares of Essar Steel were trading up 2.35 per cent at Rs 41.45 on the Bombay Stock Exchange at mid-day.
Comments
0 comment