Country's third largest steel producer JSW Steel Ltd said on Tuesday it plans to buy an 84% stake in Ispat Industries for $476 million to expand capacity in the country.
The company will subscribe to 1.09 billion shares via preferential allotment at a price of 19.85 rupees per share, it said in a statement.
Based on the closing price of Ispat shares on Monday, JSW is buying the stock at a discount of 20%. Shares of Ispat fell as much as 17% after the news while shares in JSW Steel rose as much as 5%. Analysts said that JSW ended up paying less for the deal than had been expected.
Shares of Ispat had risen more than a quarter since the beginning of December on speculation that Arcelor Mittal, Tata Steel and JSW were looking to buy the struggling firm.
Ispat is controlled by Pramod and Vinod Mittal, the brothers of the world's fifth richest man, billionaire Lakshmi Mittal, who heads the world's largest steelmaker Arcelor Mittal. Lakshmi Mittal branched out on his own in 1976 due to differences with the family.
Ispat has posted losses for the past five years except for fiscal year 2008. Its net loss narrowed to 3.2 billion rupees in the year-ended March 2010 compared with a loss of 6.9 billion rupees in 2008/09 year.
{{/usCountry}}Ispat has posted losses for the past five years except for fiscal year 2008. Its net loss narrowed to 3.2 billion rupees in the year-ended March 2010 compared with a loss of 6.9 billion rupees in 2008/09 year.
{{/usCountry}}Kotak Investment Banking represented Ispat on the deal, sources previously said. ( 1$=45.33 rupees)