ArcelorMittal's bid to enter India by acquiring additional stakes in Uttam Galva through an open offer has hit the regulatory road block and the company is now expecting to close the offer only by January next year, reports PTI.
The company is awaiting approval from the Securities and Exchange Board of India (SEBI) to launch the offer. It had earlier wanted to close the process of buying additional shares constituting about 30% stake of Uttam Galva by mid-December.
"We are currently awaiting approval from SEBI and the offer is likely to close in January 2010 if we get the approval this month. The process is going as planned," an ArcelorMittal spokesperson told PTI.
The steelmaker has been facing regulatory hurdles, besides problems in acquiring land for its proposed Rs1 lakh-crore India steel projects. Now, its inorganic route to enter the country has hit a similar bottleneck.
The company has already bought 5.6% stake in Uttam Galva and had planned to launch the open offer to buy the additional 29.4% stake in the Indian firm at Rs120 a share on 31st October, which was due to close on 19 November 2009.
The Foreign Investment Promotion Board (FIPB), which recommends overseas investments, last week had discussed the deal.
Last month, ArcelorMittal chairman and chief executive LN Mittal had said during a conference call that the open offer could get delayed on account of getting approval from SEBI but the company was hopeful of completing the process by mid-December.
In October, ArcelorMittal had entered into a partnership agreement with Uttam Galva and said it would buy 35% stake in the company through a mixed route of share purchase from existing promoters and open offer.
The total consideration payable under the open offer would be up to Rs422.70 crore. The transaction value for 35% stake is Rs500 crore implying an enterprise value of Uttam Galva Steel at Rs2,800 crore.
The NRI billionaire-led company had said that it is "excited" about its India strategy and said it would continue to tap growth opportunities in the country.
The company has plans to set up 12-million tonnes per annum steel plant in India, one each in Jharkhand and Orissa. -Yogesh Sapkale[email protected]