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Evraz Buying into Another Chinese Co.
Chinese media are reporting that Evraz Group wants to acquire 20 percent of the stock in FerroChina for the current market price of $167 million. That asset would be a complement to the Chinese Delong Holdings, a 51.05-percent controlling package in which Evraz plans to buy from Best Decade Holdings by the end of the year. Evraz is competing with the Australian BlueScope Steel for FerroChina, which has already driven the price up by 10 percent. FerroChina announced its search for a strategic foreign investor in April to increase sales and access to raw materials. Merrill Lynch undertook that search.
FerroChina is located in Changshu in eastern China. The company produces steel for use in construction and railroads and heavy industry. Its yearly capacity is 1.5 million tons. That figure should rise to 3.5 million tons this year. The company's stock is traded on the Singapore Stock Exchange. Its main shareholders are the Citibank Nominees Singapore Pte. investment fund (11,65%), board member Zhang Yedong (10.86%), and the HSBC Singapore Nominees Pte. (8,79%), DBS Nominees Pte. (6,37%) and Raffles Nominees Pte. (5,93%) investment funds. The price of the company' stock has been falling slowly all year, reaching $1.04, but news of the possible deal sent it upward by 10 percent. The company's capitalization is now $931 million. Therefore, 20 percent of it will now cost $186.2 million.
The Hong Kong South China Morning Post quotes a market source who claims that all of FerroChina will be sold Chinese law does not allow foreigners to acquire majority packages in state-owned companies, but that restriction formally does not apply to private companies.
www.kommersant.com
All the Article in Russian as of May 06, 2008
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