JSW Steel has acquired three companies in the US for $900 million to expand its geographical footprint. The target companies are Jindal United Steel Corporation, Saw Pipes, USA and Jindal Enterprises LLC.
These have 1.2 million net tonne of plate mill, 0.55 million net tonne of pipe mill and 0.35 million net tonne of double jointing and coating lines. These facilities are strategically located near a deep-water port, central to Gulf of Mexico oil and gas industries.
With this acquisition, JSW would get an entry point into growing and booming oil & gas sector in North America. The company would enhance the income accretive business model for immediate access to customers and markets through product diversification, market diversification and geographical diversification.
On completion of due diligence, JSW Steel will acquire 90% stake at an approved enterprise valuation and the balance 10% will be retained by some of the existing shareholders.
The acquisition price of $900 million works out to 6.25 times of the EBIDTA for 2006-07 (Apr-Mar) and is comparable with the transaction EBIDTA multiple of 4.7 to 14.8 times for similar transaction in the steel industry internationally, the company said in a notice to BSE.
Read more in The Economic Times article.
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