ArcelorMittal, Nippon to buy India's Essar Steel for $5.7bn

MUMBAI: Global steel giant ArcelorMittal and Japanese firm Nippon Steel said Friday they have won a bidding war for India's Essar Steel with a $5.7 billion offer for their debt-laden rival.

The deal is one of the biggest takeovers of a failing Indian company under India's first bankruptcy law, passed two years ago to help clean up crippling corporate debts.

While ArcelorMittal will own a majority stake in Essar Steel, Nippon will hold a near equal share, the companies said in separate statements.

"India is one of the most promising markets in the world with significant growth potential in the medium- and long-term and where domestically produced steel products have a superior position," the Japanese firm said.

India's central bank had earmarked Essar Steel for insolvency proceedings in August last year.

Legislation passed in 2016 makes it easier for profitable firms to take control of insolvent companies as Prime Minister Narendra Modi's pro-business government tackles bad loans hamstringing Indian banks.

Essar Steel was pinpointed as one of India's biggest defaulters.

Several steelmakers, including Indian firms Vedanta Ltd and JSW Steel, had lodged takeover bids to rival the Nippon Steel-ArcelorMittal duo.

The new owners hope to capitalise on booming steel demand in India fuelled by large-scale infrastructure projects.