New Delhi: The government has approved NRI
billionaire Lakshmi Mittal-led ArcelorMittal's over Rs 500
crore foreign direct investment for acquisition of 35 per cent
stake in steel products maker Uttam Galva.
The proposed FDI of Rs 503.37 crore by ArcelorMittal,
Netherlands, has been approved by the Foreign Investment
Promotion Board, the Finance Ministry said in a statement
here.
The FIPB nod is a major regulatory go-ahead for the deal,
which would mark the first operational presence in India for
the world's largest steelmaker whose greenfield projects here
have been plagued by regulatory and administrative hurdles.
Last month, ArcelorMittal had threatened to abandon its
20 billion dollar steel projects in Orissa and Jharkhand over
delays, but said it will look for new sites within the
country.
The Uttam Galva deal is also currently awaiting a nod
from market regulator SEBI.
The investment is for "induction of foreign equity in a
company engaged in the business of manufacture of cold-rolled
semi finished iron and steel products in cold rolling mills
etc," the Ministry said.
In early September, ArcelorMittal had agreed to acquire
35 per cent stake in Uttam Galva, a domestic producer of steel
products, for about Rs 500 crore. The proposed deal comprises
of purchase of 5.61 per cent stake from Uttam Galva's existing
promoters and another 29.39 per cent through an open offer
made to the public shareholders.
Pursuant to share acquisition, ArcelorMittal and Uttam
Galva's existing promoters, the Miglani family, would become
co-promoters of the company.
The open offer, which has been already made, was
scheduled to start on October 31 and close on November 19.
However, it has got delayed as it is yet to get a go-ahead
from market regulator SEBI.
Last week, an ArcelorMittal spokesperson said that the
open offer has got delayed and could now extend to January
2010.
As per the proposed deal, there would be a lock-in for
three years on the shares acquired (except with the consent of
ArcelorMittal or Indian promoters as the case may be), a
tag-along right and the right of first refusal between the two
parties.
The open offer has been made for acquisition of over 3.5
crore shares, or 29.39 per cent, of Uttam Galva at a price of
Rs 120 a piece -- amounting to a total consideration of Rs
422.71 crore.
Besides, ArcelorMittal is also buying 5.61 per cent from
the promoters, the price for which was earlier agreed upon at
Rs 100 a piece.
However, it was also agreed that if a higher price is
paid to the shareholders in the open offer, then the Indian
promoters will also be paid such higher price.
Bureau Report
First Published: Tuesday, November 17, 2009, 20:33