China iron & steel industry on guard of foreign M & A
http://www.oriental-cherry.com Industrial trend 3/28/2008
On March 9, a media commented that the best “firewall” to stop foreign M & A is domestic M & A, further more, domestic M & A always the best methods to security the domestic industry.
On March 5, a NPC deputy, the general manager of An Steel, Zhang Xiaogang said in Beijing that the merging of An Steel & Ben Steel would have progress this year. The chairman of Ben Steel, A member of the CPPCC National Committee, also said in Beijing that the program of the merging should be issued soon.
Analysts said it 's a trending of the industry marked by the merging of An Steel and Ben Steel. It is urgent that the industry concentration is still too low and foreign investors are accelerating their paces in 's iron & steel industry.
They are two big stumbling blocks of the domestic M & A of the industry. Different iron & steel makers owned by central government or different local governments. The managing positions of the mills are marked by different levels of official, and the profit, jobs, and taxes mainly enjoyed by local governments, who don 't want to loss the benefit.
Some people may think that have tightened the policies for foreign mergers and acquisitions. Their judges, which based on the new rules of foreign merging & acquisitions and Industry Guides of Foreign Investment (2007), sound reasonable, but don 't comprehensive. Why? Isolated case can 't represent all the cases and some steel mills ' attitudes about foreign mergers different from governments.
In the past years, ArcelorMittal has made significant progress in 's iron & steel industry. It merged Valin Pipeline in 2005 successfully. In 2007, it acquired 28% stake of oriental group Co., Ltd and then up to 73.13% stake. The deal made ArcelorMittal to be the first one who fully controls a steel mill.
To the situation, the radicals thought that it is an inevitable trend and stage of economic transition, the opponents criticized that it is a threat of national economic security. Nobody will regress.
There are only few successful cases of M & A, which are blamed to the fragmentation and too many small mills of the industry. The competitiveness of 's iron & steel industry would be seriously weakened if the domestic M & A couldn 't pave quickly.
Within the development of steel market and implementation of industry policies, the coming years will saw many new story of M & A of the iron & steel industry in .
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