Erdemir sale not expected to surpass $4 billion
In the bidding process for
Turkey's largest steel mill
Erdemir, major bidders have begun to express how much their bids would be.
Accordingly, the world's two largest steelmakers Mittal Steel Co and Arcelor SA made similar announcements today. Arcelor's CEO Guy Dollé said the company was interested in
Erdemir but not willing to offer a crazy price. Under these circumstances, Arcelor does not intend to pay much more than the market captialisation of the company.
Erdemir's current market capitalisation is around $3.5 billion. Therefore, Arcelor may bid around $2 billion for 49.20 percent of the company. However, considering that the buyer of
Erdemir will obtain an important front in the region, Arcelor may increase its bid further to $2.5 billion or even to $3 billion.
Meanwhile, Mittal Steel's Chief Operating Officer Malay Mukherjee also expects
Erdemir be sold at a rational price. Mittal Steel already owns 8.2 percent of
Erdemir and it will become the majority owner if its bid for the 49 percent turns out successful. Therefore Mittal shows a higher interest in the company, more than Arcelor does. With this regard, we can say that Mittal Steel is the strongest candidate for the purchase and it can even bid around $3.5 billion.
But in any case, a bid over $4 billion is not regarded as a strong probability for 49.20 percent of
Erdemir because these two companies will also compete for
Ukraine's largest producer Kryvorizhstal, in an auction dated October 24. Furthermore, the boom in the steel prices reached to the peak level and started to come down lately.
There are four other bidders for
Erdemir but their bids are not expected to surpass that of Mittal Steel and Arcelor.