Yamagata's reorganization of Japan Steel could only rely on market measures

The third launch of Shansteel's reorganization is still proceeding in the rough, while Shansteel’s other major reorganization, “Acquisition of Rigang,” remains unchanged.

“Yangshan Steel's restructuring is still waiting for the official approval of the NDRC, and that matter (the acquisition of Rigang) will have to wait until the internal asset integration matters have been straightened out.” A Shandong government official said in an interview, but the huge difference in funds and profits The Shansteel and Nippon Steel, whether the reorganization can proceed smoothly is still unknown.

"The son is better than Laozi"

According to Japanese Steel Chairman Du Shuanghua mentioned at the end of last year, according to the agreement, Shanshan Iron and Steel and Japan Steel should complete the delivery before the end of February this year, but now more than a month later, the reorganization is still no audio.

"We and the two sides have not talked about reorganization for a long time," said an interview with reporters on the 7th from an internal high-ranking steel company that did not want to be named.

He confirmed to reporters that except that the Rizhao City government had coordinated the previous year, there was basically no negotiation or contact regarding the acquisition and price, and the valuation and conditions of the previous negotiations had not changed.

What causes the restructuring to stagnate? "For the reorganization between different ownership enterprises can only rely on market means, and this time money has become one of the most critical conditions." An insider of China Steel Association said.

Regarding the reorganization of Japan Steel by Shansteel, on March 12th, Yang, a representative of the National People's Congress and secretary of the Rizhao Municipal Party Committee, said in an interview with the media in Beijing that in the restructuring of the two sides, the government took the lead, but with the enterprise as the main body, the market operated. In this reorganization, the government has its leading role, but the specific operation is still entirely negotiated by Shanshan Iron and Steel. Jiang Daming, governor of Shandong Province, admitted in an interview with the media during the two sessions that the key to the current negotiations between the two companies is on the issue of the purchase price.

At present, the evaluation unit China Enterprise has issued an assessment opinion to Japan Steel. According to the current evaluation results, the total value of Japanese steel is approximately 45 billion yuan. Although Du Shuang-Hua’s view of this figure still does not fully reflect the market value of the company, it is enough to once again stop Shansteel from stopping.

On March 18th and 19th, the two major listed companies of Shandong Iron and Steel Group, Laiwu Steel (hereinafter referred to as “Laigang”) and Jinan Steel (hereinafter referred to as “Jilin Steel”) announced their 2010 financial statements, which were respectively realized during the year. The net profit was RMB 124 million and RMB 84,353,500, which represented a year-on-year increase of 49.79% and 25.91% respectively.

"More than 200 million yuan in total profits and 4.5 billion in Japanese steel profits, these two figures are sufficient to show how the situation in the two sides of the game, how bleak." An industry insider who declined to be named told reporters. In his view, it is very difficult for Shansteel to purchase a steel company whose profits are several dozen times higher than itself. If it adds a valuation of 45 billion yuan, it will make the current Shansteel difficult to digest.

The road to reorganization "a wave of twists and turns"

To date, the reorganization of Shanshan Iron and Steel and Japan Steel has not been smooth.

The reporter learned that at the end of 2007, the Shandong Provincial Government issued the "Opinions on Further Accelerating Structural Adjustment of the Steel Industry" (hereinafter referred to as "opinions"). According to the “Opinions”, the construction of a large iron and steel base in Rizhao is the focus of the adjustment of the layout of Shandong Iron and Steel Industry. At the time, in the first-phase list of subsidiaries, Laiwu Steel and Jinan Steel were included in major steel companies in Shandong Province, and did not include Rigang.

“In fact, from the perspective of the steel industry development strategy of Shandong Province, the construction of Rizhao's fine steel base will become the focus of transformation. The formation of Shanshan Iron and Steel Group will inevitably transfer part of its production capacity of Jigang and Laigang to sunshine and mergers. Restructuring of Rigang will become the best choice.” Xu Xiangchun, my director of information on the steel network, told reporters. It is also based on the above reasons. On March 26, 2008, Shanshan Iron & Steel was set up and Shandong started the greater pace of restructuring in the province. On September 6, 2009, the company signed a cooperation agreement on reorganization of assets with Shangang, which had just been listed for one year, and agreed to hand over the transaction on August 31, 2010.

"Although it is the will of the government, it involves mergers and reorganizations between private and state-owned enterprises, which must be integrated and acquired at market prices. This is the combination of the two contradictions," Xu Xiangchun said.

Du Shuanghua also saw this point, with a high price of 45 billion yuan, to this large-scale but less effective big brother "Shangang" anti-one.

According to Du Shuanghua's statement, by July and August of 2010, due to various factors, the originally agreed transitional leasing business plan could not be implemented, and Shanshan Iron & Steel proposed a one-time buyout of all assets and business plans in the municipal government. The organization undertook two negotiations with Shansteel. On August 30, the two sides signed a supplementary agreement, confirming that Shansteel completed the reorganization through a one-off purchase of all assets and operations of Riken Steel and agreed to complete the handover on November 30. The two sides jointly hired a Chinese enterprise as an asset assessment agency to conduct an audit and evaluation of all assets and operations. Shansteel also organized a large team to conduct a detailed due diligence on the company. Due to external factors, by the end of November, the original settlement was again grounded. After mutual consultation, it was agreed to be completed by the end of February of the following year.

“From the current situation, the negotiations will be delayed indefinitely. I don’t know the specific time and results.” Japanese internal sources told reporters.

Restructuring will "endlessly"?

In addition to funds, another important factor that hindered Shansteel from reorganizing Japan Steel comes from the slow internal restructuring of Shansteel.

It is understood that after the initial public announcement of the restructuring plan in February 2010 by Shansteel, Jinan Steel's share swap absorption and merger with Laiwu Steel was re-started in September 2010. The reason is that after the reorganization plan came out, the share prices of the two companies continued to fall. Laiwu Steel Co., Ltd. has obvious arbitrage space, resulting in the scheme being no longer at the general meeting of shareholders. On February 18 this year, Shanshan Iron and Steel Group initiated a plan to integrate its steel assets for the third time.

“Currently, Shansteel’s restructuring is still waiting for the official approval of the NDRC, and that matter (acquisition of Nisshin Steel) will have to wait for the consolidation of internal asset consolidation.” A government official from Shandong Province told reporters, but it is not clear yet. The timetable.

“Yangshan Steel should not give up easily, but (restructuring) is also difficult.” A person in charge of the China Iron and Steel Association told the “Economic Information Daily” reporter on the phone, from the current signs, Shanshan Iron and Steel has initiated the acquisition of Japanese steel or Abandoning, or changing the current acquisition plan, will only be clear after the internal restructuring of Shansteel has come to an end.

It is worth noting that in the impasse between the two sides on the acquisition issue, shortly after the Spring Festival, Japanese Steel and China Minmetals Yingkou Middle Plate Company signed an agreement in Beijing to fully host Yingkou Medium Plate Factory and provide Daily operation and management provide "all-round management services".

Japanese Steel, led by Du Shuanghua, seems to be using the cooperation with central SOEs such as Minmetals to disclose information to the industry that this acquisition has added new variables.

“From Minmetals' point of view, we will definitely choose a stable company to cooperate, not a company that is about to be annexed and full of uncertainties.” Xu Xiangchun said in an interview with reporters that from another perspective Look, in addition to the custody of Japan Steel and Yingkou Company, it is likely that there will be cooperation projects in the future, so the acquisition of Shanshan Iron and Steel will be more difficult.

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