Companies

Jinan Steel proposes new merger plan

(Agencies)
Updated: 2011-04-13 14:56

China's Jinan Iron & Steel has rolled out its third proposal to merge with Laiwu Steel in a share swap, to forge the country's sixth-biggest steel giant Shandong Steel Group, the two companies said on Wednesday.

The shareholders of Laiwu Steel will get 2.43 shares of Jinan Steel for every share of Laiwu Steel, unchanged from the previous proposal, the companies said in two separate statements to the Shanghai Stock Exchange.

Related readings:  China's Laiwu Steel rejects merger with Jinan Steel

The new proposal will allow shareholders of Jinan and Laiwu except for Shandong Steel Group and its related companies to opt for shares in the combined entity or get cash.

The deal values Laiwu Steel at 7.18 yuan per share and Jinan Steel 3.44 yuan per share. But the companies' shares, which resumed trading on Wednesday, have risen above that valuation.

The proposals were first put forward early last year, but both companies said in August that "changes in the macroeconomic environment" as well as difficulties in the steel sector itself had forced plans to be delayed.

The two companies, based in the eastern coastal province of Shandong, already form part of the Shandong Iron and Steel Group, one of several new regional entities created to drive China's industry consolidation plans forward.

Total output of the group stood at 23.2 million tonnes in 2010, making it the world's 12th-largest producer.

China plans to put 60 percent of total output under the control of its top 10 mills by the end of 2015.

Shares of the two companies were suspended from trading since Feb 18. The shares surged to their 10 percent daily limit on Wednesday.

The proposal is subject to shareholders and regulatory approval.