Steel entrepreneur Sanjeev Gupta snaps up Australia’s Arrium

10 July 2017

Entrepreneur Sanjeev Gupta has bought struggling steel and mining group Arrium, having snatched the Australian business out from under a Korean consortium’s nose.

Mr Gupta’s GFG Alliance – which has been buying up distressed industrial businesses – will pay an undisclosed amount for Arrium, which went into voluntary administration in 2016 with debts of A$2bn (£1.2bn) having reported an annual loss of A$1.9bn.

Last month it looked as if GFG had lost out in its pursuit of Arrium, which was spun off from BHP Billiton in 2000, to a private equity consortium consisting of Newlake Alliance, JB Asset Management and Korean steel maker Posco, which had been named a preferred bidder.

Mr Gupta said he was “surprised and disappointed” at the decision but on Tuesday night administrators said that an improved bid at the last minute from GFG had swung the decision in Mr Gupta’s favour.

“The administrators and sale advisers Morgan Stanley decided the GFG offer was superior to the conditional offer of the Korean consortium with which we were negotiating,” Arrium’s administrator said in a statement.

Mr Gupta said he was “thrilled” to take on what he described as a “landmark” asset, adding that it would establish GFG as “a major participant in Australia’s industrial landscape”. Arrium will be used as a foothold in Australia by Liberty GFG as it explores adjacent markets such as renewable energy and metals.

Market estimates put the value of the transaction at several hundred millions of pounds. GFG would not be drawn on the pricing of the deal.

The future of Arrium has been a highly political affair in Australia, with thousands of jobs hanging in the balance as the sales process has dragged on for nine months.

According to Arrium’s own website, it has operations in 15 countries and 8,350 staff, with the bulk of them in Australia, mainly around its base in Whyalla, South Australia. GFG said the deal would safeguard the jobs of more than 5,500 Australian workers.

Arrium was driven into administration as commodity prices collapsed and the steel industry went into crisis after China dumped excess production on international markets.

Mr Gupta has been on a £500m spending spree that has seen GFG and Liberty acquire Rio Tinto’s aluminium smelter and hydro power plant in Scotland, chunks of Tata’s British steel operations, and Midlands car-parts maker CovPress. It is also in the process of taking on a steelworks in South Carolina from ArcelorMittal.

Source- telegraph