Mumbai: Shareholders of Canada's Algoma Steel have approved the C$1.85 billion ($1.74 billion) sale of the company to Essar Steel Holdings Ltd. at a special meeting of the company.
The deal received approval from 82.6 per cent of Algoma's shareholders, clearing the way for a subsidiary of Essar Global to buy all of the Canadian company's outstanding shares for C$56.00 each.
Algoma said it expects the deal to be completed by June 18 and that its shares will thereafter be delisted from the Toronto Stock Exchange. Algoma shares rose 70 per cent in 2007 and were mostly flat around C$55.85 during the day's trading.
Sault Ste. Marie, Ontario-based Algoma shipped 2.4 million tonnes of steel last year and generated a net income of C$221.8 million, or C$6.06 a share. The company, with its small size on the global market and sound financial health after two stints in creditor protection since the early 1990s, had been considered a prime target for a bidding war for some time.
Algoma put itself up for sale in 2005 but abandoned the plan later that year. It even considered a bid for Stelco while that company was going through its own reorganisation. The deal with Essar Steel surfaced in mid-April, a month after Salzgitter AG of Germany abandoned a potential takeover of Algoma.
The deal with Essar, with diverse interests, will allow Algoma to speed up its plans for capital upgrades. Essar will spend C$500 million in capital upgrades that Algoma had been considering for the past 18 months, said its chief executive Denis Turcotte.
"Essar felt very supportive of them and if anything just felt we should accelerate those plans," he said, adding, "So what was to us going to be a five-year, potentially seven-year, major capital programme, they want to accelerate and do within three to five years."
He said the capital expenditure will help Algoma's steelmaking capacity grow by about 1 million to1.6 million tonnes.