Mitsui sells Sesa stake to Vedanta for 1mln

Tokyo, Apr 24: Mitsui & Co. said on Tuesday it had sold its 51 percent stake in Indian iron ore exporter Sesa Goa Ltd. to British mining company Vedanta Resources Plc. for $981 million.

The sale will generate 50 billion yen ($423 million) in profit, Mitsui said in a statement.

Shares in Mitsui were down 0.7 percent at 2,080 yen, and Sesa Goa's stock, which rose 6.25 percent immediately after Mitsui's announcement, was down 1.6 percent at 1717.0 rupees as of 0459GMT.

Sources familiar with the matter told Reuters earlier that Mitsui had agreed to sell its stake to Vedanta Resources' copper producing unit Sterlite Industries Ltd. for about $1 billion.

Mitsui is shifting its business emphasis to investment, moving away from its traditional role as a middleman earning modest agent commissions.

''It's a symbolic deal,'' said Takashi Murakami, analyst at Credit Suisse. ''It would be the first time that Mitsui has sold a big, highly profitable business to gain a profit. It's a nice step for an investment company.'' Mitsui is expected to book the proceeds this business year that started in April. The company will issue its business results for the year to March and an earnings forecast for the new business year on Friday.

Mitsui's net profit for the year ended March is forecast to have risen 54 percent to 309.64 billion yen, according to a poll of 12 analysts by Reuters Estimates. That compares with Mitsui's own forecast of 300 billion yen. Analysts expect the firm's profit to grow to 342.26 billion yen this business year.

Tuesday's announcement ended a four-month, high-profile bidding war that attracted bids from global steel and iron ore giants including Arcelor Mittal and India's Aditya Birla group.

The bidding process had been delayed after the government moved in February to levy a tax on iron ore exports.

The duty of 300 rupees ($7.20) a tonne led bidders to lower valuations, with some analysts cutting their earnings estimates for Sesa as much as 24 percent.

This month, the Hindustan Times reported that Arcelor Mittal's bid was around 1,700 rupees per share, but quoting unnamed sources, said conditions attached to the bid meant an offer from the Aditya Birla of 1,550 rupees was the front runner.

The paper said Vedanta had bid around 1,300 rupees a share.

Mitsui declined to comment on Vedanta's per-share bid price.

India-focused Vedanta Resources also has operations in Zambia and Australia.

Sesa Goa owns iron ore mines in the states of Goa, Karnataka and Orissa, and counts China, Japan, Europe and Pakistan as its major export markets.

It operates a 280,000-tonne-a-year metallurgical coke plant and a 220,000-tonne-a-year pig iron plant.

Mitsui has said it plans to use the proceeds from the sale to invest in other natural resources.

Reuters