ArcelorMittal’s Essar bid

ArcelorMittal (MT), the world’s biggest steel producer, has put in a bid to acquire Essar Steel, a bankrupt steel company in India (EPI) (INDA). While the acquisition has faced several regulatory hurdles, ArcelorMittal got a break last week when one of India’s bankruptcy courts approved the company’s bid.

Indian Courts Add Another Twist to ArcelorMittal’s Essar Bid

Ruias in the fray too

The road to acquiring Essar Steel still isn’t smooth for ArcelorMittal. An Indian court has now said that it could look at permitting Ruias, which ran Essar Steel prior to its bankruptcy, to also bid for the company. However, it has also asked Essar Steel Asia Holdings (or ESAH) to first clear Essar Steel’s bad debts.

The tribunal has also chided ArcelorMittal, as it sees its offer for Essar Steel lower than what ESAH is offering. The court asked, “That is a basic question—if parties are ready to pay Rs 54,000 crore, why don’t you?”

Growth

ArcelorMittal has been looking at growth through acquisitions. Along with Essar Steel, the company also bid for Ilva in Italy. The Indian steel market is expected to witness strong growth in the coming years and is considered to be the next bright spot as China’s steel demand growth rates taper down. ArcelorMittal has a long track record of acquisitions that have catapulted the company to the top steelmaker slot.

As global steel markets have been strong over the last three years, ArcelorMittal has managed to repair its balance sheet. Asset sales and a share issuance also help it bolster its balance sheet. The company has also reinstated its dividends.

Read ArcelorMittal: Analysts See Massive Upside to see how analysts view ArcelorMittal.

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