Luxembourg-based steel giant ArcelorMittal has announced its intention to launch a tender offer on Monday, September 7, 2009 for the acquisition of 29.4 percent of shares in Uttam Galva Steels Limited (Uttam Galva), a leading producer of cold rolled steel, galvanized products (comprising plain and corrugated), and color coated coils and sheets based in Western India, listed on the major stock exchanges of India.
As per ArcelorMittal's written announcement, the price in the tender offer is Rupees 120 per share, which represents a 27 percent premium over the two-week volume weighted average and an 85 percent premium over the six-month volume weighted average. The transaction value for 35 percent stake is Rupees 5 billion (US$103 million) implying an estimated enterprise value of Rupees 28 billion (US$560 million).
On September 3, 2009, ArcelorMittal signed a share purchase agreement with the existing promoter, the R K Miglani family, for the acquisition of 5.6 percent of shares in Uttam Galva. On September 4, 2009, ArcelorMittal signed a co-promotion agreement with the R K Miglani family and company in order to become a co-promoter of the company and to obtain broad joint control rights. Subject to 29.4 percent of shares being tendered in the offer, ArcelorMittal will hold 35 percent of the equity in Uttam Galva. The completion of both these agreements is subject to customary approvals.