Dec 14 2007
ArcelorMittal (ArcelorMittal S.A. ) ("ArcelorMittal"), the world's largest steel company, today announces that it had entered into a shareholders' agreement with the controlling shareholders 1 (the "Controlling Shareholders") of China Oriental Group Company Limited ("China Oriental" or the "Company", stock code: 581) (the "Shareholders' Agreement"), which will enable ArcelorMittal to eventually raise its equity stake in the Company to 73.13 per cent.
The Shareholders' Agreement is a significant step forward for ArcelorMittal's strategy of strengthening its presence in the Chinese market. It follows the announcement on 6 December 2007 that ArcelorMittal and China Oriental had entered into a Business Cooperation Agreement. The key terms of the Business Cooperation Agreement will take effect upon the Shareholders' Agreement becoming unconditional.
Under that agreement, ArcelorMittal will share technologies, technical expertise and know-how with the aim of transforming the Company and its subsidiaries (the "Group") into a leading producer of heavy sections in the People's Republic of China (the "PRC"). ArcelorMittal will also assist the Group in sourcing iron ore and coal.
The Shareholders' Agreement will enable ArcelorMittal to become the majority shareholder of China Oriental by purchasing the Controlling Shareholders' existing 45 per cent stake in the Company over an agreed period of time. This transaction is subject to anti-trust clearance by the Ministry of Commerce and the State Administration for Industry and Commerce of the PRC.
In line with the Takeovers Code, ArcelorMittal will make a general offer for China Oriental shares not owned by it and the Controlling Shareholders at a share offer price of HK$6.12 (which represents the price at which ArcelorMittal acquired a 28 per cent stake in China Oriental from Ms Chen Ningning in November 2007) plus an amount of between HK$0.235 and HK$0.706 per share, being the cash consideration for a put option granted by ArcelorMittal to the Controlling Shareholders for sale of China Oriental shares, which was not granted to other shareholders. The maximum consideration payable by ArcelorMittal will be approximately HK$6 billion (assuming full acceptance of the offer, and the exercise of all outstanding share options).
ArcelorMittal intends to maintain China Oriental's listing status after the close of the offer.
Commenting, Mr. Lakshmi Mittal, President and Chief Executive Officer of ArcelorMittal said: "Strengthening our position in the fast growing PRC market is one of the important elements in ArcelorMittal's strategy. The purchase of a 28 per cent stake in China Oriental earlier and the signing of the Shareholders' Agreement allow ArcelorMittal to be better positioned to participate in the attractive growth of the PRC construction steel market and to develop China Oriental into a leading producer of heavy sections, focusing on leadership, quality and sustainability. "
He added: "Part of ArcelorMittal's growth over the years has been through strategic acquisitions and subsequently creating value through active management of the companies acquired. I am confident that our agreements will be further examples of how ArcelorMittal adds value through the transfer of technology and technical know-how, training, financial management, mergers and acquisitions, supply chain management and marketing as well as sustainable and resource efficient production."
Mr Han Jingyuan, Chairman and Chief Executive Officer of China Oriental said: "We are delighted to have the world's leading steel company as our strategic partner. We look forward to working with ArcelorMittal closely to further enhance the operations of our company. "
ArcelorMittal's existing investments in China 's steel industry include an about 29 per cent interest in Hunan Valin Steel Tube and Wire Company Limited and a 12 per cent interest in the Baosteel- Nippon Steel / ArcelorMittal Automotive Sheet joint Venture.
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