After nearly one year of negotiations, the acquisition by Shandong Steel of Rizhao Steel has finally been settled. On September 6, Shandong Iron and Steel Group signed an agreement with Rizhao Iron and Steel on assets reorganization and cooperation.
According to the agreement, Shandong Steel will pay cash for a 67 percent stake in Rizhao, while Rizhao will retain a 33 percent stake in the mill with its net assets after assessment. Both parties will immediately initiate their assets assessment and other relevant works after signing the agreement.
The signing of the acquisition agreement is considered to have brought into being a new steel giant in China. The simple combination of the current production figures of the two mills will enable the new Shandong Steel to rank among the top three in China's steel industry.
Based on China's steel production figures for 2008, Shandong Steel will achieve 29.3129 million mt in production after the consolidation, second only to Baosteel (35.4430 million mt) and Hebei Steel (33.2839 million mt).
In the latest list of China's top 500 enterprises, in the steel industry Baosteel ranks first with its sales revenues of RMB 246.839 billion, followed by Hebei Steel Group with RMB 167.033 billion in sales revenues. Meanwhile, Shandong Steel's sales revenues came to RMB 120.505 billion, while Rizhao Steel posted RMB 47.187 billion in sales revenues, thus resulting in a total of RMB 167.692 billion, overtaking Hebei Steel Group's sales revenues.