Japan’s JFE Steel to acquire 24 per cent stake in Chinese steelmaker
27 Jul 2010
JFE Steel Corporation, the steel making unit of Japan's diversified business group JFE Holdings Inc announced yesterday that it has agreed to acquire a 24-per cent stake in Chinese steel pipe processor Pancheng Yihong Pipe Co (PYP), making a foray into the fast-growing Chinese steel market.
Financial and other details of the transaction have not been revealed by both the companies.
Followed the Chinese transaction, JFE Steel today said that it will invest about $1 billion for a 14.99 per cent stake in India's second largest steelmaker JSW Steel. (See: JFE Steel to invest $1 billion for a 14.99 percent stake in JSW Steel).
Sichuan-based PYP is a joint venture by PanGang Group Chengdu Steel & Vanadium Co Ltd (CSST) with a nmajority a 60-per cent stake and Marubeni-Itochu Steel Inc holding the remaining 40 per cent.
PYP threads and then sells seamless pipes for oil tubular goods produced by CSST. The company's FY2009 revenue was 25 million yuan, and it has around 500 employees.
On completion of the acquisition, PYP's holdings will change to 51 per cent for CSST, 25 per cent for Marubeni-Itochu Steel and 24-per cent for JFE Steel, turning the company into a JFE Steel affiliate.
Through the partnership, JFE Steel plans to expand into Chinese market for high-grade oil country tubular goods that offer superior quality to withstand high temperature and high pressure.