Tata Ryerson set to see ownership change

The ownership of Tata Ryerson, the equal venture between Chicago-based metal distributor Ryerson Inc and Tata Steel, is expected to change in a month.

A clutch of suitors including Arcelor Mittal is said to be in the fray to buy Ryerson Inc. The winning bidder will get an automatic entry into Tata Ryerson, which is a small but significant venture for the Tatas. The closely-held company has notches up about Rs 1,000 crore in sales.

Sources said two companies "" Distributors Metals USA Inc and California-based private equity firm Platinum Equity LLC "" had already submitted bids. World's largest steel company, Arcelor Mittal, may follow suit.

Sources said the Ryerson board would convene a shareholders' meet next month to inform them of the company's plan to sell. The shareholders' meeting, which was earlier schedule on May 11, had been postponed.

However, Tata Steel is not interested in acquiring Ryerson. When contacted, the spokesperson for the company said: "Ryerson is not part of our plans as of now." Tata Steel does not enjoy the right of first refusal. However, it might be interested in acquiring Ryerson's stake in the venture, if it is given a chance, sources said.

A banker said Tata Steel had the financial capacity to buy out Ryerson. "But the question is whether Tata Steel should do it. Ryerson has problems," he added. The Ryerson stock has been hovering around $ 44-45 on the New York Stock Exchange. At this price, the company's valuation stands at $1.2 billion against its sales of $5.9 billion.

He said the combination of Arcelor Mittal and Tata Steel as owners of Tata Ryerson would make "strange partners."

Tata Ryerson is setting up units in in Pune, Chennai, Pantnagar and Singur. While Singur would cater to the Tata Motors' small car project, Chennai would be for heavy vehicles to service customers like Caterpillar, BEML, Komatsu, among others. The Pantnagar service centre is eyeing at Tata Motors, Mahindra & Mahindra, Sharda Motors, Bajaj Auto and Voltas, which have projects either at Pantnagar or in the vicinity. Next year, the company will have another facility near Kharagpur.

Ryerson put the company on the block early this year after the Albama-based Harbinger Capital Partners, one of the major shareholders, offered to replace its own directors. Harbinger said Ryerson's performance in the last few years has behind its competitors. It has been one of the lowest operating profits margins among its peers.

It is learnt that Metals USA's offer contains cash and stock in a new public company merging Ryerson and Metals USA. Platinum Equity owns steel distributors including Chichago-based Feralloy Corp.