Japanese steelmaker JFE Steel Corporation announced on July 27 that it has signed agreements with Indian steelmaker JSW Steel for JFE Steel to take an equity position in JSW and to provide the company with technical assistance.
This first concrete step of a new strategic alliance came following extensive deliberations with JSW Steel Limited since signing a strategic collaboration agreement on November 19, 2009, JFE said, adding that it now expects to participate on a full scale in the emerging market of India.
According to the agreement, JFE Steel will acquire a stake in JSW Steel by purchasing shares at a cost of INR 48 billion ($1.03 billion). The company plans to acquire 14.99 percent voting rights, and so it will make additional investments if the forthcoming acquisition does not reach this figure due to reasons including but not limited to possible fluctuations in JSW Steel's share price.
Based on JFE Steel's equity participation, the two companies plan to cooperate in a variety of areas, including JSW Steel's envisioned West Bengal steel plant project.
JFE Steel also will provide JSW Steel with technical assistance for the production of automotive steel and the implementation of operational improvements at JSW Steel's Vijayanagar Works.