New steel firm melting pot of consolidation
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| A Jigang employee works in front of a furnace at the company's plant in Jinan, Shandong province. [China Daily] |
![A Jigang employee works in front of a furnace at the company's plant in Jinan, Shandong province. [China Daily]](http://images.china.cn/attachement/jpg/site1007/20100225/001fd04cea510cf025ca0f.jpg "A Jigang employee works in front of a furnace at the company's plant in Jinan, Shandong province. [China Daily]")
Jinan Iron and Steel Co Ltd (Jigang) will acquire Laiwu Steel Corporation (Laigang) through a share swap, paving the way for the backdoor listing of their controlling shareholder Shandong Iron and Steel Group Co Ltd (Shangang).
According to statements the two steelmakers filed to the Shanghai Stock Exchange yesterday, each Laigang share, valued at 12.29 yuan, will be swapped for 2.43 Jigang shares, valued at 5.05 yuan.
Jigang will issue additional 2.29 billion shares at 5.05 yuan per share in a bid to acquire 11.6 billion worth of assets of the parent companies of Jigang and Laigang, including 3 billion yuan in cash and other assets valued at 8.6 billion yuan.
Jigang gained 8.35 percent closing at 5.71 yuan while Laigang dropped by 5.36 percent, closing at 12.37 yuan yesterday.
After the transaction is completed, Laigang will be delisted and Jigang will be renamed after Shangang.
Shandong provincial government incorporated Shangang as a State-owned platform to consolidate the local steel industry in 2008. Shangang will take controlling stakes in Jigang and Laigang, both of which had suspended trading since Nov 9, 2009 until the announcement of the merger yesterday.
Last September, Shangang acquired a 67 percent stake in privately owned Rizhao Iron and Steel. Restructuring of Rizhao is ongoing. Details of the deal were not disclosed but the statement said Shangang would inject its stake in Rizhao into its listed arm at the appropriate time.
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