JSW Steel merges with JSW Ispat

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JSW Steel merges with JSW Ispat
JSW Steel: Quotes, News
BSE 1725.00BSE Quote15.75 (0.91%)
NSE 1735.30NSE Quote5.55 (0.32%)
The boards of JSW Steel and JSW Ispat on Saturday approved a proposal to merge the two companies. This merger will make JSW Steel to become one of India's leading steel companies in terms of installed capacity.

The merger of JSW Ispat into JSW Steel is expected to bring significant strategic advantages with it, particularly alternative steel making technologies, ability to achieve swift capacity expansion, shore based facility and Pan India expansion of market reach, the company said in the press release.

In December 2010, JSW Steel took a historic step and invested Rs 2.157 crore in JSW Ispat and became the largest shareholder in JSW'spat. Now, the two companies have cemented their alliance by announcing the merger of JSW Ispat with JSW Steel.

The exchange ratio recommended by the valuers and approved by both the boards is 1 equity share of JSW Steel to be issued for every 72 equity shares of JSW Ispat.

Commenting on the merger, Mr.Sajjan Jindal, Chairman and Managing Director, JSW Steel said, "Merger of JSW Ispat with JSW Steel is an Important step in our ongoing growth journey towards creating a world class global steel company. JSW Ispat brings several unique advantages and the merger will help in realization of integration benefits of the two companies.

JSW Steel's shareholding in JSW Ispat will stand cancelled under the Scheme.

The merger will benefit the company as it de-risk single location upstream profile. Leverage each other's marketing and distribution platforms to expand market reach. Reduces marketing, general and administration overheads via better utilization of infrastructure and elimination of redundancies.

The merger will realize significant financial benefits via accelerated utilization of unabsorbed tax losses at JSW Ispat as well as optimal use of depreciation on further capital investments. It will improve JSW Ispat's cost structure via faster implementation of several plant integration initiatives.

Post merger equity share capital, the promoters of JSW Steel will own 35.12% in the merged entity, 14.92% shall be held by JFE Steel International Europe BV {herein referred to as •JFE HoldlngsW) and the remaining 49.96% will be held by the Public shareholders.

The shares of the JSW Steel were seen lower by 1.01% and JSW Ispat lower by 1.77% on BSE at 10.15 am IST.


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