New Delhi: India-born steel czar L N Mittal has set its eyes on POCO, and has been planning a hostile takeover bid for acquiring the South Korean conglomerate, reports Korea Economic Daily.
The Korean giant is looking to build up its defence against any such move by raising friendly shareholding in the company, media reports added.
The news daily reported that the world's largest steel maker Arcelor-Mittal was mulling hostile takeover of Pohang Steel Company (POSCO) and a message about Arcelor-Mittal's interest was conveyed to the Korean major last month.
The paper said that Roland Junck, an adviser to Arcelor-Mittal CEO Lakshmi Mittal had in February asked POSCO specific questions about its merger and acquisition strategies in Asia.
Junck also asked if POSCO, the world's third-largest steel producer, was interested in collaborations for its Orissa steel project in India, the report said.
The daily quoted an unnamed POSCO executive, as saying that Arcelor Mittal's interest in POSCO's M&A strategy means the firm has put POSCO on its M&A target list.
"The top management is pondering how to react to a potential hostile takeover bid," the paper quoted the official as saying, who also added that POSCO was looking to raise the number of friendly investors to ensure a stable management and avoid any hostile takeover.
POSCO is believed to be focusing on alliances with Asian steel makers through cross-shareholding to head off potential hostile takeover bids, as part of which Nippon Steel recently raised its holding in POSCO by two per cent to five per cent.
The company has been cited as a ripe takeover target by the analysts due to its diversified shareholder base. The company is 60 per cent owned by overseas investors, with Nippon Steel holding 60 per cent stake as its biggest shareholder and ally.
Warren Buffett's Berkshire Hathaway Inc also owns about 4 per cent in POSCO, which it had acquired for 572 billion dollars and its value rose to 1.16 billion dollars at the end of last year, Buffet said in an annual letter to shareholders.
Meanwhile, POSCO's share dropped 1.4 per cent in Seoul. The stock gain soared more than 55 per cent in the past one year.
POSCO's possible acquisition could be another big deal in steel space after Mittal Steel's 38 billion dollar takeover of European giant Arcelor last year and Tata Steel's 12 billion dollar winning bid for Corus in January this year.
POSCO CEO Lee Ku Taek has repeatedly said that the company should boost its value to avoid becoming a takeover target.
He had said in a communiqué to the company's shareholders last month that "if our market value increases, reducing the merits of a takeover, then there won't be any mergers and acquisitions."
With excerpts from PTI
Comments
0 comment