Indian steelmaker Essar Global Limited (Essar Global) has announced that, through its wholly-owned subsidiary Essar Steel Holding Limited (Essar), it has signed a definitive arrangement agreement to acquire all common shares of Canadian steel producer Algoma Steel (Algoma) for CND$1.85 billion ($1.63 billion), payable in cash.
Under the terms of agreement, Algoma is to undertake a court approval plan of the arrangement. Moreover, the arrangement must be approved by Algoma's shareholders by an affirmative vote of at least 66 and two thirds percent of the votes cast at the shareholder meeting, and will be subject to customary closing conditions including the necessary regulatory approvals. Moreover, the agreement between the two companies provides for compensation payable to Essar in the event that the acquisition is not completed under certain circumstances.
Algoma expects that its shareholders' meeting for the approval of the transaction will be held in June and that the acquisition will be completed shortly after that.
Commenting on the issue, Essar Global chairman Mr. Shashi Ruia stated, "We believe Algoma is an excellent addition to our existing steel business and also offers growth potential. Algoma provides us with an excellent platform for the Canadian and North American markets".
Mr. Benjamin Duster, chairman of Algoma's BoD said, "This transaction will also benefit Algoma's employees and the city of Sault Ste. Marie as it will result in new ownership that is committed to investment in Algoma's facilities to support growth and business sustainability".