Evraz Group SA, the steelmaker part owned by Russian billionaire Roman Abramovich, entered into agreements that may lead to a S$2.1 billion ($1.5 billion) takeover of Singapore-based steel trader Delong Holdings Ltd.
Evraz will initially acquire about 10 percent of Delong at S$3.9459 a share from Best Decade Holdings Ltd., Luxembourg-based Evraz said today in a statement distributed by the Regulatory News Service. That represents a 31 percent premium over Delong's closing share price of S$3.02 in Singapore trading on Feb. 18
Delong, which manufactures hot-rolled steel coils in China, would be Evraz's first acquisition in Asia, the steelmaker said. Steel demand in China, the biggest user of the alloy, is expected to expand more than 40 percent in the next three years, according to U.K. steel consulting company MEPS (International) Ltd.
Delong has more than doubled this month in Singapore trading, rising 8.2 percent on Feb. 18 to the highest since Nov. 9.
Calls to Lai Kwokin, investor relations officer at Delong in Singapore, were unanswered. No one was available to take a call seeking comment at Delong's Beijing office.
Evraz, Russia's second-largest steelmaker, said it has separate agreements to acquire a further 41 percent of Delong from Best Decade, including an option to buy a 32 percent stake. If that option is exercised, under Singaporean regulations Evraz will make an offer for the rest of Delong it doesn't already own.
The value of the deal was calculated using the 535 million shares that Delong had outstanding as of Feb. 12.
Abramovich, who controls the Chelsea soccer club, part owns Evraz through his holding in Lanebrook Ltd., which owns a majority stake in Evraz.