Indian steelmakers JSW Steel Ltd and Ispat Industries have entered into a definitive agreement according to which the former will buy a controlling stake in the latter.
According to press reports, the preferential allotment of shares will be worth INR 21.57 billion (approximately $477 million) to JSW Steel at a price of INR 19.85 a piece, significantly lower than their prices last week. This equals a stake of around 41 percent in heavily debt-burdened Ispat.
Ispat's founder will hold a 26 percent stake in the company after the JSW deal, Anil Surekha, executive director told shareholders at the firm's annual general meeting, adding that the new venture will be named JSW Ispat Steel Ltd.
JSW plans to refinance Ispat's entire debt by September 2011, press reports have pointed out, quoting JSW managing director Sajjan Jindal.
The deal will make JSW the largest steelmaker in India, exceeding Steel Authority of India (SAIL), reports said.