POSCO sees no benefit in merger with large rival-FT

LONDON, Oct 5 (Reuters) The head of POSCO , the world's fifth-largest steelmaker, rejected in a newspaper interview on Thursday the idea of a merger with another big steel firm in response to the creation of Arcelor Mittal.

Lee Ku-taek, chief executive of the South Korean company, told the Financial Times: ''We do not see any obvious synergy effects (benefits through cost savings or access to broader markets) that would result from a merger between us and any other large steelmaker.'' Lee, however, said this did not mean POSCO would always be averse to such a move.

He also said he might be keen to ''extend our existing relationship'' with Japan's Nippon Steel Corp.

Nippon Steel and POSCO executives met in Buenos Aires this week to continue discussions about increasing ties, Nippon Steel President Akio Mimura told Reuters on Tuesday.

Mimura said there was no decision yet on whether to strengthen capital ties such as cross-share shareholdings between the two companies, both top-five world steelmakers, to reduce the chances of a potential foreign hostile takeover.

The merger of the world's two biggest steel companies, Mittal and Arcelor, into Arcelor Mittal , has other big steelmakers looking at ways to bulk up in defence.

POSCO has said it is interested in buying an Asian steelmaker.

Lee, for his part, voiced an interest in China.

''I would love to do something in China (through a merger) but much will depend on the thinking (towards foreign ownership) of the Chinese government and I hope to see a change in stance on this,'' he said.

REUTERS KR GC2001