Nippon Steel Corp. (5401), Japan’s largest steelmaker, agreed to buy ArcelorMittal (MT)’s 12 percent stake in an automotive-steel venture in China as demand for cars rises in the world’s largest market.
The Japanese steelmaker will increase its stake in Baosteel-NSC/Arcelor (BNA) Automotive Co. to 50 percent from 38 percent, Masato Suzuki, a spokesman for Tokyo-based Nippon Steel, said by phone today, without giving the value of the deal. Baoshan Iron & Steel Corp. will retain the remaining 50 percent in the venture. The deal will need approval from Chinese authorities, he said.
Total vehicle deliveries in China will grow about 5 percent this year after surging 32 percent to a record in 2010, according to the China Association of Automobile Manufacturers. Baosteel-NSC/Arcelor, which started production in 2005, has a capacity of 2.2 million tons a year.
“We’ve concluded to buy the stake as we expect stable return from the venture, judging from a further growth in the Chinese auto market,” Suzuki said.
Nippon Steel signed the agreement to buy the stake on June 27, the company said in a statement.
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