Shougang broke into the northeast steel enterprises and fought 2.5 billion won about 70% of Tonghua Steel

Recently, Jilin Tonghua Iron and Steel Group Co., Ltd. (hereinafter referred to as "Tonggang") and Shougang Corporation (hereinafter referred to as "Shougang") officially signed the "marriage" in Jilin Changchun. The final reorganization plan of both parties seems to be more favorable to Shougang than the previous version said.

According to an insider of Shougang yesterday, the “First Financial Daily” revealed that Shougang will invest RMB 2.5 billion to acquire about 77% of Tonghua’s equity, part of which will be transferred free of charge by the Jilin Provincial State-owned Assets Supervision and Administration Commission. . Previously, it was reported that Shougang was expected to acquire more than 60% of Tonghua Steel's equity, and Shougang's final shareholding ratio could be further improved.

In addition to the investment of 2.5 billion yuan, Shougang will continue to invest funds to carry out technical transformation of Tonghua Steel Project and eliminate backward production capacity.

According to informed sources, Jilin Province had previously planned to increase Tongtong's production capacity to 10 million tons. However, due to the NDRC's strict restrictions on the expansion of steel production capacity in inland cities, the plan finally made adjustments. In the process of negotiations with Shougang, Jilin Province lowered its production capacity target for Tonghua Steel, with a final target of more than 7 million tons.

After Shougang enters Tongtong Steel, it will upgrade and upgrade Tonghua Steel to improve the profitability of Tonghua Steel. At the same time, with this opportunity, Shougang, which seeks development opportunities nationwide, has also expanded its strategic map to the Northeast.

On July 24 last year, Jianlong Group, a large private steel company in China, was opposed by some employees of Tonghua Steel in the process of restructuring Tonghua. Since then, the Jilin Provincial Government Working Group has agreed to terminate the implementation of the Jianlong Group's plan to restructure Tonghua. The Jilin Provincial State-owned Assets Supervision and Administration Commission has subsequently thrown out “hydrangea” to several major domestic steel companies. According to the reporter's understanding, Jilin Province has actively found steel companies such as Angang Group, Shougang Group and Hunan Valin Steel (4.11, 0.00, 0.00%) Group to negotiate with them on the restructuring of Tonghua Steel. According to the above-mentioned insiders, during the negotiation process, Angang took the initiative to withdraw.

Unlike Shougang, Angang has a large production capacity. In May, the State-owned Assets Supervision and Administration Commission of the State Council just approved the merger and reorganization between the central enterprises Pangang Group and Angang Group. If all of the substantial mergers and acquisitions are achieved, Angang's final production capacity will exceed 65 million tons, becoming the domestic industry leader.

After Shougang gradually moved from Beijing, it is seeking development space everywhere. In 2009, the total output of Shougang crude steel was only 17.3 million tons. Prior to the reorganization of Tonghua Iron and Steel, Shougang's strategic map never radiated to the northeast region, and the implementation of the national revitalization of the Northeast Plan has greatly increased the demand for steel.

Although Jilin Province has set a high target for steel production capacity, Shougang will undoubtedly face fierce competition from large steel enterprises in Northeast China, such as Angang Steel.

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