LNM could control Iscor by September 2003

Anglo-Dutch group LNM Holdings NV could secure a controlling stake of more than 50,1% in South Africa’s key steel company, Iscor (ISC), as early as September 2003.

On Tuesday, LNM moved to up its Iscor stake from 34,8% to 47% and the group can also earn up to 5% extra in Iscor if it achieves cost savings as part of a business assistance agreement signed in November 2001, bringing its total stake in Iscor to 52% by September 2003.

The South African government welcomed LNM’s move to up its stake in Iscor. An analyst called LNM’s partial offer, without a full minority offer, “a cunning move” as shareholders are likely to accept the offer price of R30 a share but the risk in the future is that Iscor’s share price could go lower, allowing LNM to buy cheaper Iscor shares.

Behind European steel maker Arcelor, the LNM Group, of which LNM Holdings NV is a wholly own subsidiary, is the second largest steel producer in the world, while Iscor has four South African steel operations and in its 2002 financial year produced 5,6-million tons of final steel products.

LNM on Tuesday made an offer to Iscor minorities to buy 12,19% of Iscor shares — 18,7% of the total minority shareholders’ holding.

However, its offer is conditional on minorities waiving their right to a mandatory minority offer from LNM, which is required by South African law once

a shareholder has a 35% or more stake in a company.

The LNM offer of R30 a share equates to $175-million for the 12,19% Iscor stake.

The benefits for Iscor, as a result of LNM’s increased stake, according to LNM are: further co-ordination of purchasing and marketing; accelerate Iscor’s transformation into a world class producer; and provide Iscor with a great level of technology.

The offer is subject to Iscor shareholder approval, the recommendation of the Iscor board, approval by the Securities Regulatory Panel.

No South African government or competition authority approval is required for the deal.

The offer closes on January 24, 2003 and payment of the consideration of 30 rand a share is set for January 29, 2003.

The South African government welcomed the LNM’s announcement that it was seeking to buy an extra 12.19% in Iscor.

The government said it believed that this will help increase the competitiveness of the South African steel industry within the global economy and help secure the future of a key area of beneficiation of South African resources.

“The government is supportive of the transaction and welcomes the retention of Iscor’s South African listing and a liquid market in the shares,” the

Department of Trade and Industry said in a statement.

The key sensitivity for the South African government is that it doesn’t want to be seen to be openly approving the selling off of the nation’s assets,

a source said.

Iscor shares were volatile on the JSE Securities Exchange South Africa (JSE) on Tuesday.

At about 1030, Iscor rocketed 11% or R2,40 to R24,10 on the news that LNM would make an announcement at 1230 regarding a further increase in its investment in Iscor.

Iscor’s share price touched an all-time high, since its unbundling in November 2001, of R27,75 following the news of the exact offer by LNM.

But by 1445, Iscor was trading at R23, down from its earlier highs due to that fact that LNM’s offer is only a partial offer, not a full offer as expected.

At 1700, the closing time on the JSE, Iscor finished 5% or R1,09 up at R22,79.

The LNM Group was established in 1976, with a 60 000 tons per annum rod mill in Indonesia. The LNM Group has vertically integrated steel making facilities in 10 countries and has a pending acquisition in an eleventh country. – I-Net Bridge

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories

NUM members on strike at Kumba

The National Union of Mineworkers (NUM) has been on strike since 6pm on Sunday at Kumba Resources and the union will be consulting its members at 6pm on Monday regarding Kumba's latest offer, NUM Kumba representative Jackie Tshimanegape said.

Trying times at De Beers

The world's largest diamond miner, De Beers, on Friday said it expects the outlook for the global rough diamond market for the second half of 2006 to be difficult. "It has been a testing time over the past six months," De Beers chairperson Nicky Oppenheimer said during a results teleconference.

Lafarge signs R1,1-billion BEE deal

Lafarge South Africa on Friday signed a R1,1-billion empowerment deal with consortium Sinako that may result in 26% of its quarries and 10% of its manufacturing businesses in South Africa being sold. Lafarge Mining incorporates aggregates and limestone, and Lafarge Industries incorporates cement, gypsum-plasterboard and ready mix concrete manufacturing.

Windfall tax team issues discussion document

The five-person panel appointed by the Treasury to study the possibility of imposing a windfall tax on petrochemicals group Sasol and state-owned PetroSA on Thursday issued a 102-page discussion document. Finance Minister Trevor Manuel first mooted the possibility of a windfall tax during his Budget speech in February.

Solidarity strike to enter second day

The strike by trade union Solidarity's members at petrochemicals group Sasol is set to enter a second day after a meeting held with the company did not lead to any resolution of the wage dispute and other issues, Solidarity spokesperson Jaco Kleynhans said on Tuesday.

Sasol concludes R1,45bn BEE deal

South African petrochemicals group Sasol on Thursday announced that the R1,45-billion Tshwarisano black economic empowerment (BEE) transaction has been successfully concluded. In terms of the agreement, Tshwarisano acquired a 25% shareholding in Sasol's South African liquid-fuels business housed in Sasol Oil.

Subscribers only

The shame of 40 000 missing education certificates

Graduates are being left in the lurch by a higher education department that is simply unable to deliver the crucial certificates proving their qualifications - in some cases dating back to 1992

The living nightmare of environmental activists who protest mine expansion

Last week Fikile Ntshangase was gunned down as activists fight mining company Tendele’s expansions. Community members tell the M&G about the ‘kill lists’ and the dread they live with every day

More top stories

The high road is in harm reduction

While the restriction of movement curtailed the health services for people who use drugs in some parts of the world, it propelled other countries into finding innovative ways to continue services, a new report reveals

Khaya Sithole: Tsakani Maluleke’s example – and challenge

Shattering the glass ceiling is not enough, the new auditor general must make ‘live’ audits the norm here in SA

State’s wage freeze sparks apoplexy

Public sector unions have cried foul over the government’s plan to freeze wages for three years and have vowed to fight back.

‘Veteran’s stripes’ vs ‘kind and fair’

This weekend the Democratic Alliance will choose between two starkly different visions for its future

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday