The world’s second largest steel maker, Anglo-Dutch group LNM Holdings, has upped its partial offer for an additional 12,19% which would take its stake in South African steel giant Iscor (ISC) from just under 35% to 47%.
The group announced late on Tuesday that it had revised its offer price from R30 to R33 per share.
Explaining the rationale behind the revised offer, LNM said it continued to believe that its strategic association with Iscor was a key factor in the current and future success of the South African steel maker.
“Iscor’s 2002 annual report states that the strategic association ensures Iscor’s participation in the benefits of consolidation in the international steel industry by providing Iscor with technology sharing, market access, procurement leverage, productivity benchmarking and skills transfer.
“The association between Iscor and LNM is designed to enhance the earnings of Iscor for the benefit of all Iscor shareholders. LNM considers that the success of the strategic association may be demonstrated through the performance of the Iscor share price since LNM’s association with Iscor commenced.
“As at 2 December 2002, being the last trading day prior to the publication of the original announcement on 3 December 2002, Iscor shares were trading on the JSE Securities Exchange South Africa and closed at a price of R21,70 per share.
This represents an increase for Iscor shareholders of 266,6% over the price of R5,92 rand per share as at the close of business on 26 November 2001, the first day that Iscor traded as a focused steel producer post unbundling.
This was four days after LNM entered into the Business Assistance Agreement with Iscor on 22 November 2001.
“LNM, therefore, believes that its involvement and incentivisation as a long term strategic investor under the Business Assistance Agreement is beneficial to all Iscor shareholders,” the Anglo-Dutch group said in a statement.
LNM said it believed it was currently in the best interests of Iscor’s business and all Iscor shareholders that Iscor continued to be a South African listed entity with a sufficient free float of independent shareholders to maintain a liquid market in Iscor shares.
It also continued to believe that Iscor minority shareholders should be offered the chance to sell a portion of their Iscor shares at a premium to the current share price.
“This will provide Iscor minority shareholders with the opportunity to crystallise a significant profit on their investment in Iscor,” it stated.
It added: “As a result of increasing its shareholding in Iscor, LNM expects to be in a position to transfer a greater level of technology, especially significant to South Africa’s rapidly growing motor industry, to further enhance its purchasing and marketing co-ordination and further accelerate Iscor’s transformation into a world class producer with global access.
“The independence of the Iscor board, the maintenance of an arm’s length business relationship between LNM and Iscor, and corporate governance standards generally applicable to Iscor should not, in LNM’s view, be adversely affected by the revised offer.”
A meeting of Iscor shareholders was adjourned on Wednesday last week and will resume on Wednesday February 12 at which time they’re likely to decide on the revised offer. However, some institutional investors are apparently looking to accept nothing less than R50 a share, according to media reports. – I-Net Bridge