Arcelor Mittal resumes talks with Laiwu Steel

BEIJING/SHANGHAI - Arcelor Mittal is back in talks with Chinese steelmaker Laiwu Steel, an Arcelor official said on Monday, after Beijing regulators indicated that its initial offer of $258 million was unacceptable.

By (Reuters)

Published: Mon 12 Mar 2007, 4:57 PM

Last updated: Sat 4 Apr 2015, 10:48 PM

The National Development and Reform Commission found that Laiwu’s assets were undervalued in a preliminary decision sent to the State-owned Assets Supervision and Administration Commission of Shandong province, the Beijing-based China Business Journal reported on Monday.

‘The NDRC has sent a letter to Shandong. It gives some reflections on some things that need to be clarified,’ Arcelor Mittal representative Dirk Matthys said from Shanghai on Monday.

‘The Laiwu project is certainly not off, although there are some things to discuss.’

Arcelor Mittal and Laiwu agreed in February 2006 that Arcelor would buy 38.41 percent of Laiwu Steel Corp. Ltd. in a deal valued by Chinese sources at 2 billion yuan ($258 million). Beijing-based regulators refused to rule on the deal for a year, despite support from the Shandong provincial government.

The letter said Laiwu’s assets were undervalued as Laiwu’s stock price has risen sharply following the merger of Mittal and Arcelor. The NDRC also recommended Arcelor Mittal provide not only funds but also core technology to Laiwu, the paper said.

Laiwu’s shares have risen 142 percent since the end of February 2006. A 38.41 percent share of the firm would be valued at 4.7 billion yuan, based on its share price of 13.34 yuan a share on Monday.

Matthys declined to comment on the contents of the letter.

A public relations official from the Shandong assets commission also declined to comment.

Arcelor Mittal had met Laiwu Steel and was ‘making progress’, Matthys said. The partners had earlier agreed to extend the deadline for finalising the purchase to June 30, with the potential to further extend to Sept. 30 if there was a ‘reasonable chance’ the deal would go through.