• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

Deal for 100% equity purchase

Mumbai April 16 The Ruias-controlled Essar Group has agreed to buy the Canadian steel company Algoma Steel Inc for $1.58 billion (around Rs 6,636 crore) in an all-cash deal.

This is the second acquisition this year by an Indian company of an overseas steel plant. In January, Tata Steel had agreed to acquire UK-based Corus for $12 billion.

Essar Steel Holding, a subsidiary of Essar Global, will pay Canadian $56 per share, which is at a 48 per cent premium on the average price for the 20-day period ending on February 14, 2007, the day Algoma confirmed that it was in talks for a potential deal, said a joint press release issued by both the companies.

Ontario-based Algoma is the third largest steel company in Canada, accounting for 15 per cent of the steel production in that country. In 2006, Algoma produced 2.6 million tonnes (mt) of steel.

Deal terms

Under the terms of the deal, Algoma will undertake a court approved plan of arrangement for Essar to acquire the 100 per cent shares, which will have to be approved by 60 per cent of shareholders votes. The Canadian steel producer is expected to hold the shareholders' meeting in June for seeking their approval to the deal.

Essar proposes to finance the acquisition through a combination of debt and equity. An Essar spokesperson said he could not talk on the deal until the details of it are intimated to the Canadian stock exchange.

Listed on the Toronto Stock Exchange, Algoma has reported a net income of Canadian $221million in 2006, marginally lower than Canadian $239 million earned in the previous year. The company employs 3,200 people.

Unanimous support

"The board of directors (of Algoma) unanimously supports the Essar proposal as it reflects a significant premium to the historical share price of Algoma," Mr Benjamin Duster, Chairman of Algoma, was quoted in a press release.

Mr Shashi Ruia, Chairman of Essar Group, said: "The acquisition fits in with our vision of having world class low-cost assets, with a global footprint. Algoma provides us with an excellent platform for the Canadian and north American markets."

Shares of Essar Steel rose to Rs 41.20, up by 1.75 per cent, on Monday. The Ruias, holding 88 per cent of shares in Essar Steel, had sought shareholders approval for de-listing the company.

More Stories on : Steel | Mergers & Acquisitions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`SIPs back in favour among retail investors'

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line