Web Exclusive

Baosteel may buy into EU peers

By Yu Hongyan (chinadaily.com.cn)
Updated: 2010-02-25 14:41
Large Medium Small

China's largest steel maker Baosteel Group has prepared 5 to 10 billion euros ($6.76 to $13.52 billion) to cooperate with or buy into one of the two candidate stainless steel makers in Europe, sources told the 21st Century Business Herald yesterday.

The two targeted companies are Spain's Acerinox SA and Outokumpu Group of Finland.

To beef up its research and development strength on stainless steel products, Baosteel is to team up with a European peer for its technologies instead of a business operation, according to the report.

Related readings:
Baosteel may buy into EU peers New steel firm melting pot of consolidation 
Baosteel may buy into EU peers Ministry optimistic about iron, steel industry in 2010
Baosteel may buy into EU peers Baosteel to raise steel prices by up to $103 per ton
Baosteel may buy into EU peers Baosteel says 2009 net profit falls 11%

Sources say that Acerinox is a proper choice for an Asian steel maker to break into the European market, based on its relatively low offering price and its geographical position. Meanwhile, two of Acerinox's majority shareholders are likely to slice their stakes to back its reach on the international market, according to mergermarket, and independent M&A intelligence institute.

By comparison, Baosteel's approach to Outokumpu may be hurdled, the sources said. A Chinese company usually intends to buy above 15 percent of the targeted company in overseas acquisition, he said, but the Finland government, holding 31 percent of Outokumpu, may not allow it to sell that much to a foreign investor.

Both the two selected companies expressed their interest in the Chinese market, as Acerinox had said that it did not rule out the possibility of building a plant in China, and Outokumpu is to establish a new service center in March or April this year, the paper said.