Global Steel buys plant in Turkey

Global Steel Holdings, a special purpose vehicle controlled by the Pramod and Vinod Mittal Ispat group, has signed a deal to acquire Turkish steel company Izmir Demir Celik for $78.4 million (about Rs 340 crore).

This comes within a fortnight of Global Steel Holdings' announcement that it was in advanced stages of acquiring a 2.2 million-tonne steel mill in Bulgaria.

The total investment for the Bulgarian acquisition, combined with further investments and environment management, is about $300 million.

With the acquisition of the Turkish company, which has a capacity of 1 million tonnes, matching mills and associated infrastructure, including a captive port, the Ispat group's capacity will go up to 15 million tonnes.

Sources in Global Steel Holdings said the company signed a deal with Turkiye Is Bankasi AS, the largest private bank in Turkey, last week, to acquire the latter's 54.68 per cent stake in Izmir.

The remaining shares of Izmir Demir Celik, listed on Istanbul Stock Exchange, are widely held. The formalities related to the acquisition will be completed by this month.

Sources said the Turkish bank had put its stake in Izmir Demir Celik up for sale in June 2003 after regulators ordered Turkish banks to trim industrial holdings. The bank decided to exit the steel company as the holding was a part of its non-core activities.

The acquisition may help the Ispat group to acquire other steel companies in Turkey. Global steel giants like Mittal Steel and Arcelor are believed to have lined up plans to acquire the largest Turkish steel mill, Eregli Demir & Celik Fabrikalari AS. Bids for this company are expected to be invited towards the end of this year.

Nearly 75 per cent of Izmir Demir Celik's products are exported. It posted a net profit of euro 29.5 million (Rs 164.4 crore) in 2004, recovering from net losses in the previous year.