Tata Steel top bidder for Bhushan Steel
India's largest steelmaker, Tata Steel has placed the highest bid for Bhushan Steel. The deal, if it gets through, will provide a significant capacity addition to Tata Steel.
This acquisition bid comes at a time when the cyclical steel sector is in a recovery mode with Steel prices going up by more than Rs 10,000 per tonne in the last six months. According to news reports, Tata Steel has bid Rs 36,000 crore for the debt-laden Bhushan Steel, which is reported to be Rs. 5,000 crore higher than JSW's bid.
Bhushan Steel has a debt of over Rs. 45,000 crore. The company's promoter claim that most of its debt is unpaid interest and funds borrowed to set up the plant (approx. Rs. 30,000 crore). The company's management also cited de-allocation of captive coal blocks as a reason for its fall.
If the deal go through PSU banks will breathe a sigh of relief, despite taking a haircut and the steel industry will witness the much need consolidation among steelmakers.
At 12:32 hours, Bhushan Steel was cheered by investor and was struck in upper circuit at Rs. 53.85 per share, up by 19.93 per cent. While Tata Steel was booed and was trading at Rs. 655.55 per share, down by 5.98 per cent.