JSW Steel to buy Welspun Maxsteel for over Rs 1,000 crore.
Monika Prakash
(Editor DERIK TIMES)
JSW Steel, the country's third largest steel maker, has entered into an agreement to acquire sponge iron maker Welspun Maxsteel in a deal worth over Rs 1,000 crore. Under the JSW Steel-Welspun Maxsteel deal, the steel maker will take over the debt of Welspun Maxsteel. Welspun Maxsteel has a debt of Rs 1,030 crore on its financial books.
WHY? They are quitting Steel-making business because it has no synergy with core business. When they started this business in 2009,there was no issue regarding gas availability but from the past few years scarcity of gas is their major concern. This acquisition is value-accretive to JSW Steel due to synergies in supplying surplus pellets. Deal will boost the cheaper supply of raw materials to the JSW steel.
Present Scenario. The sale is an all-debt deal, but a win-win situation for both the parties. It has strategic goal to enhance its steel production to 40MT in the next decade.
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