Baosteel to buy major stake in Ningbo Iron

SHANGHAI: China's largest steelmaker Baosteel Group inked an accord with Hangzhou Iron & Steel Group Co on Sunday to acquire a majority stake of the latter-controlled Ningbo Iron & Steel Co, a move that heralds the kick-off of a nationwide consolidation in the steel industry, analysts said.

Baosteel purchased a combined 56.15 percent stake of Ningbo Steel for 2 billion yuan from three private corporations: Tangshan Jianlong Industrial Co Ltd (30.53 percent), Fosun International Ltd (20 percent) and a branch company under New Hope Group (5.62 percent).

During a board meeting after the deal, shareholders agreed on an issue of additional shares. After that, Baosteel's stake remains 56.15 percent, while State-run Hangzhou Steel's stake will be diluted to 34 percent as the second-largest shareholder, and the remaining 9.83-percent share is controlled by the Ningbo government.