Nippon Steel to acquire Thai flat steel producers G Steel and GJ Steel

Nippon Steel Corporation (NSC) said that it will acquire Thailand-based flat steel producers G Steel Public Company Limited and GJ Steel Public Company Limited to gain access to their steel mills for up to JPY 88 billion ($763 million).

The Japanese steelmaker has signed a share purchase agreement with funds managed by Ares SSG, which presently is the largest indirect shareholder in the two Thai firms. The consideration for this is $419 million and the deal is expected to close next month.

Subsequently, Nippon Steel will launch a tender offer to acquire the remaining shares in G Steel and GJ Steel for a price of up to $344 million.

Nippon Steel is pursuing the takeovers with an aim to grow its integrated production capacity in overseas markets where the demand for steel is growing.

The Japanese steelmaking company said that it wants to achieve 100 million tons in crude steel capacity per annum globally by taking up capacity expansion in India, and mergers and acquisitions of local integrated steel mills in Asia.

Nippon Steel to acquire Thai flat steel producers G Steel and GJ Steel. Photo courtesy of Kakidai/Wikipedia.org.

Nippon Steel stated: “Global steel consumption is expected to continue to grow steadily to 2025 and further to 2030. NSC has developed its business mainly in Asia especially China, the ASEAN countries and India, where the market size and growth rate are large in global terms and NSC is in an advantageous position to be able to lead the market size and growth to NSC’s earnings growth.”

Founded as Siam Strip Mill in 1995, G Steel has a production capacity of 1.58mm t/yr. On the other hand, G J Steel, which was founded as Nakornthai Strip Mill in 1994 has a production capacity of 1.5mm t/yr.

According to Nippon Steel, G Steel and GJ Steel are the only integrated flat steel producers in Thailand having facilities such as electric arc furnaces (EAFs) and hot strip mills. The companies supply hot-rolled steel sheets for general purposes.