Steel tycoon Gupta snaps up Australia's Arrium

Wednesday 12th July 2017 06:31 EDT

Sanjeev Gupta's GFG Alliance bought steel and mining group Arrium and will pay an undisclosed amount for the company which went into voluntary administration in 2016 with debts of A$2 billion. The news comes as a surprise as just last month GFG seemingly lost the chase as the company was spun off from BHP Billiton in 2000, to a private equity consortium consisting of Newlake Alliance, JB Asset Management and Korean steelmaker Posco.

Gupta said he was “surprised and disappointed” at the initial decision, however, administrators said that an improved bid at the last minute from GFG had swung the decision in Gupta's favour. Arrium's administrator released a statement saying, “The administrators and sale advisers Morgan Stanely decided that GFG offer was superior to the conditional offer of the Korean consortium with whom we were negotiating.” Arrium will be used as a foothold in Australia by Liberty GFG as it explores adjacent markets such as renewable energy and metals.

Market estimates put the value of the transaction at several hundred millions of pounds. The future of Arrium has been a highly political affair in Australia, with thousands of jobs hanging in the balance as the sales process has dragged on for nine months. According to Arrium’s own website, it has operations in 15 countries and 8,350 staff, with the bulk of them in Australia, mainly around its base in Whyalla, South Australia. GFG said the deal would safeguard the jobs of more than 5,500 Australian workers.

Arrium was driven into administration as commodity prices collapsed and the steel industry went into crisis after China dumped excess production on international markets. Gupta has been on a £500m spending spree that has seen GFG and Liberty acquire Rio Tinto’s aluminium smelter and hydro power plant in Scotland, chunks of Tata’s British steel operations, and Midlands car-parts maker CovPress. It is also in the process of taking on a steelworks in South Carolina from ArcelorMittal.

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