KIEV: World's largest steel producer Mittal Group, through its unit Mittal Steel Germany, has won the right to acquire Ukraine's biggest steel mill. The sale of state-owned Kryvorizshtal plant in central Ukraine is one of the steps initiated by President Viktor Yushchenko as part of the economic reforms.
The Mittals' offer of 24.2 billion hryvnias ($4.8 billion) for the plant in the auction, was closely contested by Industrial Group, controlled by Arcelor. The administration had expected to get around $3 billion for the plant.
While analysts termed the price on the higher side, Mittal officials declined comment, except saying they were in a position to make the purchase. The group gets 93.02 per cent holding in the company.
The country's prime minister Yuri Yekhanurov said after the auction that he would use the fund to buy out five or six other companies, which, he said, were sold unfairly. The auction was telecast live.
The plant had earlier been sold to the son-in-law of former president Leonid Kuchma and his associate for almost one-fifth of the price the Mittals offered today. Yushchenko had described the sale as a theft and it was annulled after he became president.
Kryvorizhstal produces eight million metric tonnes of steel a year, 20 per cent of Ukraine's metal output.
India-born Lakshmi Mittal, chief executive of Mittal Steel Co., said he was a little nervous about the investment. Asked whether he overpaid, he said: "I can say that the Ukrainian administration has been very lucky to receive this price." The acquisition will increase the group's steel production by 15 per cent giving it an almost self-sufficient operation in the growing Eastern European market.
Mittal said all the 56,000 employees in the plant would be retained.
The former owners, Kuchma's son-in-law Viktor Pinchuk and his associate Rinat Akhmetov had appealed against the annulment of the sale of the plant to them, but most of their appeals were rejected. One is pending before Ukraine's Supreme Court. They had also moved the European Court of Human Rights and in the United States through a third party. The Ukrainian government said it will return the money that the Pinchuk-Akhmetov consortium paid.
Posted
on : Tue, 25 Oct 2005 00:35 GMT | Business News
By : Mike Lawson
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