Usha Martin hits 52-week high as Tata Steel to acquire steel business

Usha Martin rallied 16% to Rs 36.40 on BSE after Tata Steel has executed a definitive agreement for the acquisition of the company's steel business through a slump sale on a going concern basis.

Shares of Usha Martin hit a 52-week high of Rs 36.40 per share, up 16% on the BSE in the opening deal after Tata Steel has executed a definitive agreement for the acquisition of the company’s steel business through a slump sale on a going concern basis.

“The company has executed definitive agreements for sale of its steel business to Tata Steel or its subsidiaries through a slump sale on going concern basis for consideration being in the rage of Rs 43 billion – Rs 47 billion,” Usha Martin said on Saturday in a press release.

The closing of the acquisition is subject to the fulfilment of various conditions under the agreements. The parties shall jointly work towards fulfilment of conditions precedent which are largely regulatory approvals required for the transfer of the business undertaking. All the employees pertaining to the steel business will transfer as part of the acquisition, Tata Steel said in a statement.

The steel business undertaking of Usha Martin inter-alia comprises of a specialized around 1.0 mtpa alloy based manufacturing capacity in long products segment based in Jamshedpur, a producing iron-ore mine, a coal mine under development and captive power plants. The acquisition is part of the overall strategy to build capability in long products and expand product offerings including high-value added products, it added.

At 09:27 am; Usha Martin erases partial its early morning gain and was trading 3% higher at Rs 32.35 on the BSE. In comparison, the S&P BSE Sensex was down 0.26% at 36,745 points. The trading volumes on the counter nearly doubled with a combined 6.51 million equity shares changed hands on the NSE and BSE so far.

Tata Steel, on the other hand, was trading flat at Rs 623, after hitting a low of Rs 613, down 2% in early morning trade. It touched an intra-day high of Rs 626 on the BSE so far.