ArcelorMittal's bid to enter India by acquiring additional stakes in Uttam Galva through an open offer has hit the regulatory road block and the company is now expecting to close the offer only in January next year.
The company is awaiting approval from the Securities and Exchange Board of India to launch the offer. It had earlier wanted to close the process of buying additional shares constituting about 30 per cent stake of Uttam Galva by mid-December.
"We are currently awaiting approval from SEBI and the offer is likely to close in January 2010 if we get the approval this month. The process is going as planned," an ArcelorMittal spokesperson told PTI.
The steel maker has been facing regulatory hurdles, besides problems in acquiring land for its proposed Rs 1 lakh-crore India steel projects. Now, its inorganic route to enter the country has hit a similar bottleneck.
The company has already bought 5.6 per cent stake in Uttam Galva and had planned to launch the open offer to buy the additional 29.4 per cent stake in the Indian firm at Rs 120 a share on October 31, which was due to close on November 19, 2009.
The Foreign Investment Promotion Board, which recommends overseas investments, last week had discussed the deal.
Shares of Uttam Galva today closed at Rs 115.75 on the BSE, down 0.04 per cent as compared to the previous close.
Last month, ArcelorMittal Chairman and CEO L N Mittal had said during a conference call that the open offer could get delayed on account of getting approval from SEBI but the company is hopeful of completing the process by mid-December.
In October, ArcelorMittal had entered into a partnership agreement with Uttam Galva and said it would buy 35 per cent stake in the firm through a mixed route of share purchase from existing promoters and open offer.
The total consideration payable under the open offer would be up to Rs 422.71 crore. The transaction value for 35 per cent stake is Rs 500 crore implying an enterprise value of Uttam Galva Steel at Rs 2,800 crore.
The NRI billionaire-led company had said that it is "excited" about its India strategy and said would continue to tap growth opportunities in the country.
The company has plans to set up 12-Million Tonnes Per Annum steel plant in India, one each in Jharkhand and Orissa.
