The world's biggest steelmaker ArcelorMittal announced Monday that it has concluded its acquisition of debt-laden Essar Steel, a significant win for India's nascent bankruptcy law designed to help nurse insolvent companies back to health.
The announcement brings a fractious chapter to a close after India's Supreme Court cleared ArcelorMittal's bid for Essar Steel last month, setting aside a previous ruling by a national tribunal that threatened to obstruct the deal.
One of India's key steelmakers, Essar Steel was earmarked for insolvency proceedings in 2017 under the country's first ever bankruptcy law passed a year earlier.
‘The acquisition of Essar Steel is an important strategic step for ArcelorMittal,’ the global giant's chairman Lakshmi Mittal said in a statement.
‘India has long been identified as an attractive market for our company and we have been looking at suitable opportunities to build a meaningful production presence in the country for over a decade,’ Mittal said.
ArcelorMittal will run the company in a joint venture with Japan's Nippon Steel, which will hold the remaining 40 percent stake in the newly-formed entity, the statement added.
The announcement follows a move by India's parliament to table a bill amending the bankruptcy law to offer protection to buyers against criminal action levelled against previous owners over unpaid dues and other issues.
It also comes as ArcelorMittal's worldwide investments face stress, especially in Italy, where it recently pulled out of an agreement to buy struggling local firm Ilva.
ArcelorMittal began leasing the plant in Taranto in 2018 and had plans to invest 2.4 billion euros to revive it.
But last month it said it planned to cut 5,000 jobs, prompting new negotiations with Italy, which considers the steel mill a strategic industrial site and faces pressure from unions.
Shares of ArcelorMittal were down by almost two percent on the New York Stock Exchange Monday.