London, Aug.4 : Arcelor-Mittal's CEO and main shareholder Lakshmi Mittal has put his plans for taking a majority stake in a Chinese steel maker on hold.
According to the London-based Financial Times, Mittal has said that he may have to settle for a stake of just under 30 per cent in China Oriental, even though it had at one time appeared confident of holding more than 70 per cent.
"We may have to accept less than we wanted. If this happens, I will be disappointed. But a stake in the company of 30 per cent or so still is very useful for us," Mittal said.
Mittal said the Chinese government was still not happy with the idea of a foreign steel maker controlling a leading steel producer.
Beijing regards the steel industry as a strategic sector that it wants to build up to a global force.
China Oriental's main asset is a mid-sized steel mill in the north of the country that produces four million tonnes a year.
Mittal's Luxembourg-based company had built a 73 per cent stake in China Oriental, which is listed in Hong Kong, through various share transactions. Some of these transactions later turned out to require the approval of the Chinese government.
The company is believed to have valued this putative 73 per cent stake at about 1.7 billion dollars.
However, this year, Arcelor-Mittal was forced to sell back some of its shares in the company to restore a free float of more than 50 per cent.
It now emerges that Arcelor-Mittal is unlikely to win approval by Beijing to buy all the shares it wanted from existing investors.