HONG KONG (AP) — ArcelorMittal, the world's largest steelmaker, said Friday it will offer at least $1.65 billion for the remaining shares in China Oriental Group Co. that it does not own after a ruling by Hong Kong's securities regulator.
But an analyst said Beijing was unlikely to give its approval for foreign majority ownership in such a strategic sector of the Chinese economy as steel.
ArcelorMittal said it would offer at least 6.12 Hong Kong dollars ($0.79) a share, the same price it paid for a 28.02 percent stake, or 820 million shares, in the Chinese steelmaker last month, according to a statement posted on China Oriental's Web site.
That would bring the total offer price for the remaining 2.1 million shares to at least HK$12.9 billion, or $1.65 billion.
The Luxembourg-based steelmaker said it would maintain China Oriental's listing on the Hong Kong stock exchange.
The purchase would still need to be approved by China's communist leadership, which has strict rules on foreign majority ownership.
''They would have to go through an approval process, and the chances are of approval being given any time soon is highly unlikely,'' said Scott Laprise, a Beijing-based steel and auto analyst for brokerage and investment bank, CLSA.
''Steel is not thought of in China as it is in other places. It's not just a commodity, it's a strategic part of the economy,'' he said.
ArcelorMittal has been expanding its investments as it seeks to build its position in the world's biggest steel-making and consuming market.
However, its bid to buy a 38 percent stake in state-owned mid-sized steelmaker Laiwu Steel Corp. stalled after Chinese regulators demanded a higher price to let the deal go through.
Approval for the China Oriental takeover would depend on how much Beijing wanted to be seen as interfering with a private company, said Hubert Tang, a Shanghai-based analyst with UBS.
''The government has made it very clear that it does not want foreign majority ownership in state-owned steel mills, but in this case, it's a private-owned company, and it's up to the chairman to decide how much of his shares he wants to sell,'' he said.
The Chinese company makes steel billets, strips, cold-rolled and galvanized steel at factories in Hebei province in northern China and in Guangdong province in the south.
The Hong Kong Securities and Futures Commission ruled Thursday that ArcelorMittal had acted in concert with China Oriental's chairman, Han Jingyuan, to buy the 28 percent stake. Under Hong Kong listing rules, ArcelorMittal is now obliged to make a general offer for the rest of China Oriental, according to a statement posted on the regulator's Web site.
ArcelorMittal's support would help the company become one of China's leading producers of heavy-section steel, said Han, who holds a 45 percent stake in the company.
ArcelorMittal said it would share technology and technical expertise with China Oriental, and assist the Chinese company with sourcing iron ore and coal.
''We have made no secret of our wish to participate more actively in the China's fast growing steel market, and the agreements we have signed are a major step forward in delivering that strategy,'' Lakshmi Mittal, ArcelorMittal's president and chief executive officer, said in the statement.
China Oriental's shares have been suspended from trading on the Hong Kong stock market since Nov. 7.