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Sesa Goa: Mittal likely to clinch Mitsui stake in Sesa Goa

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Amidst speculation about who outbid whom in the final run for Sesa Goa, Arcelor Mittal is believed to have inched ahead of competition. The world’s largest steel maker and leading mining company Rio Tinto were touted to be the front-runners to acquire 51% stake in Sesa Goa, which was put on the block by its controlling shareholder, Japan’s Mitsui & Company. Until late Monday night, there was no confirmation from the Japanese major on who was the winner.

Arcelor Mittal

Six bids were submitted in the final round. JSW Steel, Sterlite, the AV Birla group and Australian iron ore company BHP Billiton are also in the fray.

Sources close to the deal claim that the bids are between Rs 2,100 and Rs 2,500 a share. However, the top three bidders have bid around Rs 2,500 a share. “There is absolutely no doubt that the valuation is very steep,” said an analyst. At this price, the enterprise value of Sesa Goa will be Rs 10,000 crore. It has a paid-up capital of Rs 39.36 crore, comprising 3.93 crore equity shares of Rs 10 each. “Iron ore prices have reached an all-time high and it is only natural that metal giants will look at acquiring mining assets. Companies need iron ore reserves at any cost, hence such high valuations,” the analyst said.

Sesa Goa has reserves of medium grade iron ore of over 150 million tonne located in Goa, Karnataka and Orissa. The company is currently exporting around 10 million tonne annually. Analysts said the high valuation was more on account of the prospective lease for the mines in Jharkhand. The iron ore in the eastern state is expected to be of very high quality.

Sesa Group

The overwhelming response for Sesa Goa’s 51% stake, after the government allowed 100% FDI in mining, is also largely because foreign companies are looking at it as a vehicle to enter India, which has substantial iron ore reserves.

LN Mittal-controlled Arcelor Mittal is also eyeing other iron ore reserves of Mitsui elsewhere in the world. Mitsui has reserves in Australia and also owns 5% in Brazilian iron ore company CVRD. Arcelor Mittal announced plans to build a Rs 40,000-crore-plant in Orissa last month, and gaining control of Sesa Goa would obviously secure iron-ore supplies for the proposed project, said analysts.

The shares of Sesa Goa gained 56% since December 22, when reports of Mitsui’s plans to sell its entire stake in the company became public. It is also the biggest gainer on the Bombay Stock Exchange-100 index this year. The stock, however, was down 0.11% to close at Rs 1902 on the BSE on Monday.Courtesy: The Financial Express

One Comment

  1. DEAR SIR ,
    I AM SHARE HOLDER OF SESA GOA CO.
    I NEED EMAIL ID OF SESA GOA SHARE HOLDERS,
    RIGHT NOW I AM IN USA ,AND I CAME TO KNOW ABT BYE BACK OF SESA GOA.PL. ARRANGE TO SEND ME ALL DETAILES ABT THIS ON MY EMAIL.

    AWAITING FOR YOUR POSITIVE RESPONSE.

    MRS. SUMEDHA
    1857-EAST LAKE RD
    ERIE-PA-16511
    USA.

    aim1857@gmail.com

    1. ANUPAM on April 11th, 2007 at 1:43 am

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