The world’s largest steel maker Arcelor Mittal, leading mining company Rio Tinto and home-grown JSW Steel of of Sajjan Jindal are among the front runners to acquire the controlling stakes in Sesa Goa, which was put on block by its controlling shareholder, Japan's Mitsui & Company.
Sources close to the deal said that six bids were submitted in the final round. Besides these three, Sterlite, AV Birla Group and Australian iron ore company BHP Billiton have also put up their bids.
All the six bids are in the range of Rs 2,200 to Rs 2,500 per share. However, the top three bidders have bid around Rs 2,500 per share. 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.
Mitsui is expected to sign the memorandum of understanding (MoU) with these leading bidders – Arcelor - Mittal, Rio Tinto and JSW Steel -- for detail due diligence including the site visit (facilities and mines), sources close to the deal said. In fact, the company management had made a presentation to all the six bidders in the last January.
It may be recalled that Hindustan Times reported on the bidders on December 22 last year. Sources said that the deal is expected to conclude in the next siz week. Mitsui & Company owns 51 per cent stake in the company. The company has posted a net profit before tax of Rs 807 crore on a turnover of Rs 1,735 crore in 2005-06.
As per conservative estimates, the company has reserves of high grade iron ore of over 150 million tonnes located in Goa, Karnataka and Orissa. The company is currently exporting around 10 million tonnes of ore annually. However, the exorbitant valuation is also on the prospective lease in Jharkhand.
Meanwhile, investment banking sources said that BHP Billiton and Rio Tinto are expected to join hands to bid for world’s one of the largest aluminum player Alcoa, based in the US.
The overwhelming response for Goa clearly reflects that the metal industry is witnessing consolidation and the leading players are looking for mining asset across the world aggressively, said one of the Indian bidders. After the government allowed 100 per cent FDI in the mining, the foreign companies are aiming to make their presence in India.
In the case of Sesa Goa, LN Mittal controlled Arcelor, is eying for other iron ore reserve of Mitsui in other part of worlds. Mitsui has reserve in Australia and also own 5 per cent stake in Brazilian iron ore company CVRD.