25 Feb 2010 10:26

Baosteel Group may buy stake in European stainless steel mill

Shanghai. February 25. INTERFAX-CHINA - Baoshan Iron and Steel Group (Baosteel Group), a leading Chinese steelmaker, is negotiating with two European stainless steel mills, Acerinox, S.A. in Spain and Finland-based Outokumpu Group, for a potential stake purchase, state media reported on Feb. 24.

According to a 21st Century Business Herald report, Baosteel Group plans to pay one of the companies between EUR 5 billion ($6.76 billion) and EUR 10 billion ($13.53 billion) for the purchase, which will give it access to more advanced stainless steel production technology.

The report cited Mergermarket, a Mergers and Acquisitions (M&A) intelligence service provider, as saying that Acerinox's two major shareholders, Corporacion Financiera Alba, S.A. and Omega Capital SL, both Spanish investment companies, are willing to sell a portion of their shares, but only at a 20 percent premium.

Meanwhile, an anonymous industry insider was quoted as saying that Baosteel Group may accept the Acerinox deal as the price is more reasonable and the company's location is convenient. Furthermore, the government of Finland may not allow overseas investors to acquire more than a 15 percent stake in a Finnish company.

According to recent Baosteel Group announcements, the company plans to promote its stainless steel product brand in 2010 in order to increase its market share. The company's stainless steel business also saw positive results in 2009 after suffering losses in the past two years, and 30 percent of its products are advanced or newly-developed.