Home / World Business
Tue, May 30, 2006 - Page 10 News List

Russian tycoon to buy stake in Evraz group

AFP AND AP , MOSCOW

Russian tycoon Roman Abramovich has agreed to buy a stake of around 40 percent in Russia's top steelmaker, Evraz Group, in a transaction valued at around US$3 billion, a report said yesterday.

An official announcement of the acquisition could be made this week, the business daily Vedomosti said, quoting unnamed sources close to Abramovich and Evraz chairman Alexander Abramov, who holds over 59 percent of the shares in the company.

The report came one business day after Russian steel group Severstal emerged as a white knight to help European steelmaker Arcelor SA fend off a hostile takeover bid from the world's number one steelmaker, Mittal Steel Co.

Abramovich, the 11th-richest person in the world according to Forbes magazine's rankings, was reported earlier this year to be in discussions on acquiring a stake in Luxembourg-registered Evraz.

Evraz representatives confirmed the company was in talks with Abramovich's Millhouse Capital but declined to provide any further details, while Millhouse managers declined any comment on the reported deal, the paper said.

Abramovich has been involved in the metals sector in the past and Vedomosti said that with the Evraz purchase the billionaire, who owns the Chelsea football club and spends much of his time in Britain, "is returning to the metallurgical business" in Russia.

In 1999, Abramovich bought controlling stakes in the Bratsky and Krasnoyarsky aluminum factories, which were later merged with the big Rusal steelmaker controlled by another of Russia's wealthiest businessmen, Oleg Deripasky.

Abramovich later sold his stake to Deripasky for an estimated US$3 billion, Vedomosti said.

Meanwhile, the steel tycoon who is joining with Arcelor SA to forge the world's biggest steel producer said he would eventually seek to hold 45 percent in the new company, a Russian news agency reported yesterday.

OAO Severstal chief Alexei Mordashov also said he wanted "to increase my interest to 45 percent, but only as long as this meets the interests of other shareholders and the regulators in Luxembourg," according to Interfax news agency.

"I'm not entitled to do this right now," he was quoted as saying.

Mordashov also said in an interview published yesterday in Vedomosti that Arcelor was buying back 150 million of its own shares, after which they would be canceled, thus raising his stake to 38.5 percent.

"There was little sense in buying additional shares -- they are very expensive," Mordashov was quoted by Vedomosti as saying.

Arcelor has said it will put the deal with Severstal to shareholders at an extraordinary meeting.

The Wall Street Journal reported yesterday that Mittal Steel was racing to derail Arcelor's proposed combination with Severstal.

Goldman Sachs Group, Mittal's financial adviser, must gain the support of at least 20 percent of Arcelor shareholders to convene an "extraordinary" meeting at which the Severstal deal would be subject to debate. Arcelor has been battling a hostile bid from Mittal.

This story has been viewed 2032 times.
TOP top