The Telegraph
Since 1st March, 1999
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Ruias buy Canadian steel firm

Calcutta, April 16: The Ruias of Essar have snapped up Algoma Steel Inc of Canada.

Essar will pay about $1.58 billion or Canadian $56 a share to acquire the third largest steel player of Canada in an all-cash deal.

This is the second largest acquisition by an Indian company in North America after AV Birla group’s buyout of Novalis earlier this year.

The acquisition will be carried out by Essar Global — the overseas investment arm of Essar Group — through its wholly owned subsidiary, Essar Steel Holdings Ltd.

It will be funded by a mix of debt and equity, and the details will be disclosed in a few days.

Algoma Steel is an integrated player based in Sault Ste Marie, Ontario, with a capacity of 2.6 million tonnes (mt). Its sales stood at $1.7 billion in 2006 and net income at $195.6 million. This acquisition will provide Essar access to the North American market.

Algoma mainly produces sheets, which accounted for 76 per cent of 2006 shipments. The remaining 24 per cent comprised plates.

The company’s entire production is sold in Canada and the US to steel service centres, the auto industry, fabricators and manufacturers.

Essar Steel has a plant in western India with a capacity of 4.6 mt. The company plans to invest Rs 8,500 crore to raise it to 8.5 mt by 2009.

Essar Steel Holding, which carries out all steel activities of the group, also operates a cold rolling complex in Indonesia. It has finalised plans to set up an integrated steel plant for flat products in Trinidad and Tobago and a strip mill in Vietnam.

Under the terms of the agreement signed today, Algoma will undertake a court-approved plan of arrangement, which has to be ratified by two-thirds of Algoma shareholders.

The Canadian company expects the shareholders to meet in June and approve the deal.

Algoma chairman Benjamin Duster said: “The board of directors unanimously supports the Essar proposal as it reflects a significant premium to the historical share price of the company. This transaction will also benefit the employees and the City of Sault Ste Marie as it will result in new ownership that is committed to investment in Algoma’s facilities to support growth and business sustainability.”

Essar Group chairman Shashi Ruia 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.”

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