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Mittal is first foreigner to run China steel major

Indian-born billionaire Lakshmi N. Mittal’s ArcelorMittal, the world’s largest steelmaker, became the first foreign corporation to take over a Chinese steel company by signing a $1.8 billion deal with China Oriental Group Company Limited, according to reports here Saturday.

However, the landmark deal came in a week that also saw Mittal lose out on a bid to take over another Chinese steel company, Laiwu Steel, because the Chinese government refused to give the go-ahead.

In principle, the China Oriental deal is still subject to approval by China’s ministry of commerce and the state administration for industry and commerce for anti-monopoly concerns.

But ArcelorMittal vice president (M&A) Ondra Otradovec said China Oriental is a Bermuda-registered and Hong Kong-listed private company and so may not be subject to Chinese regulations that forbid foreign companies from taking a controlling stake in Chinese state-owned companies.

Under the agreement, ArcelorMittal will acquire a 45 percent stake of China Oriental from its controlling shareholders, eventually raising it to 73.13 percent.

The deal is estimated to cost ArcelorMittal 8.1 billion HK dollars (US$ 1.03 billion) to acquire the 45 percent stake and an additional 6 billion HK dollars (US$0.7 billion) to buy out 26.87 percent stake currently held by minor shareholders.

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