Muthuraman in Calcutta on Thursday. Picture by Kishor Roy Chowdhury

Calcutta, Dec. 15: Tata Steel has concluded its second overseas acquisition in Thailand. It bought Millennium Steel for $130 million, which would give Tata Steel a controlling stake in the Thai steelworks.

It is the largest steel company in Thailand with a production capacity of 1.7 million tonnes (mt) of long products for construction and engineering steel for auto industries.

Tata Steel today signed an agreement with Cementhai Holding Co, a 100 per cent subsidiary of Siam Cement Co, Thailand, to acquire its shares in Millennium Steel.

“The acquisition is in line with our strategy to reach the targeted 15 mt by 2010 and 25-30 mt by 2015,” said Tata Steel managing director B. Muthuraman, following his return from Bangkok.

Tata Steel will buy Cementhai’s 40 per cent stake in Millennium Steel for $72 million and then infuse a fresh capital of $58 million by way of new shares equivalent to 24.99 per cent of the expanded capital of Millennium Steel.

After the equity capital is expanded, the stake Tata Steel acquired from Cementhai will be diluted to 30 per cent. As a result, Tata Steel will hold a 55 per cent share in the company.

Following this, the Indian company will have to make an open offer for the remaining 45 per cent.

Considering the amount it has already shelled out, Tata Steel would stump up close to $240 million if the open offer is fully subscribed.

The tender offer and subscription to new shares by Tata Steel will be at Baht 1.15 per share. After this acquisition, Tata Steel will have an 8.7-mt capacity, which includes 5 mt from its Jamshedpur plant and 2 mt from the Singapore-based Natsteel.

Muthuraman said the company was still looking at fresh acquisitions. “We are setting up greenfield plants at Chhattisgarh, Orissa and Jharkhand. There are plans to set up units at Iran and Bangladesh.”