Deal between JSW Steel and Ispat carved out in eight days flat

It took just eight days of meetings and several rounds of rigorous negotiations between the promoters and lenders of the two companies — the financially stable JSW Steel and the bleeding Ispat Industries, to carve out the contours of their deal.

“It is a $3 billion quicksilver deal, in a record time,” a beaming Sajjan Jindal (pictured above), vice-chairman and the face of the JSW Group, said.
He visited the Ispat facility for the first time last Saturday.

Much of the time, was spent in “convincing them (Ispat promoters and Ispat lenders) why JSW is a best fit for Ispat”, Jindal said as Vinod Mittal, co-promoter of Ispat, and younger brother of Pramod (who are siblings of Lakshmi Niwas Mittal, the chairman of Arcelor-Mittal), looked on.

Jindal, who spearheaded the deal from the JSW side, called it a historic deal in the sense that in a country like India, where steel businesses are highly fragmented and high capacities are concentrated in a few hands, consolidation between two big steel makers is a landmark achievement.

“When Lakshmi Mittal acquired Arcelor, it was said that it will kick off a consolidation wave in the world, but I was always of the opinion that it is impossible to consolidate in India,” Jindal said.

He said while both the companies had been negotiating for a deal, it was the hard work of the last two days that bore fruit.

“I can recall, in the last two days we just came back to our places for a shower and were back to the discussions,” he said.

He pointed out that it was Seshagiri Rao, joint managing director and group chief financial officer of the JSW Group and Vinod Mittal’s son Atulya Mittal who were instrumental in sealing the deal.

Jindal said the strategic partnership will actually benefit the 9 lakh shareholders of Ispat Industries who had been waiting patiently for the last few months for a deal to be consummated.

“We will unlock value in a company (Ispat Industries) which is technically much richer than JSW Steel itself,” he said.

Vinod Mittal, who is the executive vice chairman and younger brother of Ispat promoter Pramod Mittal, appeared nonchalant, but he was surely a relieved man after having been chased by lenders for almost a year now.

“Since I had to announce the deal, I skipped the AGM today in Kolkata,” Mittal said - and thereby avoided shareholder barbs, perhaps.

Ispat’s 25th annual general meeting was scheduled for Monday and Mittal avoided taking calls from the press all through Monday.

“I deliberately did so so as to not spread gossip before the announcement,” he said.

He did not say if there were other suitors.