29 Nov, 2011

Sanyo and Mitsui invest in steel biz of Mahindra Ugine


J. Sagar Associates (JSA) advised Japan’s Sanyo Special Steel Co – who along with Mitsui & Co – have agreed to invest an amount of Rs. 187 crore ($ 37 million) in the steel business of Mumbai-based Mahindra Ugine Steel Company Limited (Musco).


In a two-tiered transaction, Musco will first hive off its steel business to a wholly owned subsidiary via a slump sale. Thereafter, Sanyo and Mitsui will subscribe to 29 percent and 20 percent of the shares of the wholly owned subsidiary respectively. Sanyo’s investment for its stake in the wholly owned subsidiary will be Rs. 111 crore ($22 million) and Mitsui’s will be Rs. 76 crore ($15 million), thus making Musco the majority shareholder of the wholly owned joint -venture company.


Musco is expected to drive general management of the joint venture company while Sanyo will provide technical assistance and Mitsui will support the marketing function of the joint venture. Sanyo’s technical assistance will enable the venture to strengthen and differentiate its product portfolio with the introduction of new products for niche and emerging market segments in India – namely, Oil & Gas, Power and Engineering industries. Mitsui will help the company strengthen its sales and marketing footprints in the niche and emerging segments, as well as in the existing alloy steel market in India.


The JSA team comprised of Partners – Akshay Chudasama, Manisha Kumar and Ashoo Gupta (advising on Real Estate) along with Senior Associates – Manav Raheja & Jamshed Bhumgara and Associates – Pinaz Mistry & Prerna Arora. The Tokyo office of Herbert Smith acted as International legal advisors to Sanyo.


AZB & Partners advised Mitsui with a team led by Partner Aditya Vikram Bhat while Tokyo office of Clifford Chance acted as International legal counsel to Mitsui. Khaitan & Co. advised Musco with a team led by Partner Vaishali Sharma.

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