SINGAPORE (AP) — Russian steel producer Evraz Group SA said Tuesday it is seeking to buy a Chinese steel products maker in a move to expand into China, the world's fastest-growing market.
It has entered into a pact to buy 51 percent of Singapore-listed Delong Holdings Ltd., said Evraz, adding that it will make an offer to buy the remaining shares.
The company will pay 3.9459 Singapore dollars (US$2.80; euro1.91) a share for the stake and will offer the same price for the remaining shares, valuing Delong at about S$2.1 billion (US$1.5 billion; euro1.0 billion).
Delong shares, whose shares were halted Tueseday, last traded Monday at S$3.02.
''This investment by Evraz in the Chinese steel sector, our first in the Asia Pacific region, is a critical strategic move to expand our global footprint,'' Evraz Chairman and Chief Executive Alexander Frolov said in a statement released in Singapore.
Evraz, partly owned by Russian billionaire and Chelsea soccer club owner Roman Abramovich, has been expanding to markets including Africa and the U.S. Most recently, Evraz bought U.S.-based Claymont Steel Holdings Inc.
The acquisition of the 51 percent stake is subject to antitrust clearance by the Chinese government.
The Russian company said it doesn't intend to change Delong's management following the acquisition.
Evraz said it is buying the stake from Best Decade Holdings Ltd., which owns 77.08 percent of the steel products maker. Delong Chairman Ding Liguo owns a majority stake in Best Decade.
The acquisition includes an initial buy of about 10 percent of Delong shares for S$3.9459 each, and options to buy an additional 32.08 percent for S$3.9459 a share under certain conditions. The options last six months. In addition, Best Decade will sell another 8.97 percent of Delong at the same price to Evraz after certain restrictions are lifted.
''This seems to be a good price and the right size bite for Evraz'' in China, said CIMB-GK analyst Lawrence Lye. The offer is close to the all-time high of S$4.02 that Delong shares hit in July, he noted.
Merrill Lynch (Singapore) Pte. Ltd. is acting as a financial adviser to Evraz while Citigroup is advising Best Decade.
