JSW Steel buys controlling stake in ispat industries
“JSW Steel Ltd., India’s third- biggest producer, agreed to buy a controlling stake in Ispat Industries Ltd. for 21.6 billion rupees ($476 million), adding capacity to meet demand from auto and construction companies,” according to Bloomberg.
The report says “Ispat will sell Mumbai-based JSW 1.09 billion new shares at 19.85 rupees each, 21 percent less than yesterday’s closing price, JSW said today in a statement to the Bombay Stock Exchange.
JSW will make an open offer to buy an additional stake in Ispat as part of the deal, it said.
JSW, part-owned by Japan’s second-largest steelmaker, plans to double capacity to 16 million metric tons by 2015 and invest 145 billion rupees in the next five years to add capacity in the states of Karnataka and West Bengal.
“With this purchase, JSW will get additional capacity at a discount,” said Giriraj Daga, an analyst at Nirmal Bang Securities Ltd. in Mumbai before the announcement of the deal. “However, it may have to raise fresh loans to take on the high debt of Ispat.”
The purchase may raise JSW’s debt to equity ratio to 1.4 from 0.8, Daga said. Ispat owns a blast furnace and a hot-rolled coil plant with a capacity of 3 million tons near Mumbai, according to its website. The complex also has a 1.6 million ton capacity sponge iron plant.
JSW, owned about 15 percent by JFE Holdings Inc., rose 1.9 percent to 1,187.35 rupees at the close of trade in Mumbai yesterday. Ispat surged 11 percent, the most in three months, at 24.95 rupees.”
According to JSW Steel’s website, the company “offers the entire gamut of steel products, pellets, slabs, HR coils/ sheets, HR plates, CR coils, Galvanized coils/ sheets, Colour coated coils/ sheets. It is the leading manufacturer of cold rolled, galvanized and colour coated steel with manufacturing facilities at Vasind & Tarapur in Maharashtra.
JSW Steel is the largest manufacturer and exporter of galvanized steel in India with its products exported to over 100 countries. It is the first Indian Company, under a technology licensing from BIEC International Inc., USA to produce Galvalume sheets.”
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