Russia’s Estar steel group denied reports suggesting it was close to inking an agreement to buy ISTIL, a firm whose main asset is a small Donetsk steel mill.
“We are not buying ISTIL,” Estar’s PR manager Lubov Popova told the Post.
Ukrainian news agency and newspapers last week reported Estar, controlled by Russian lawmaker and billionaire Vadim Varshavsky, was holding talks to buy the Ukrainian mill controlled by the Pakistani-founded ISTIL group.
ISTIL, founded by Pakistani native Mohammad Zahoor, refused to comment on the deal.
The sale of ISTIL’s Donetsk mill, the group’s principle production asset, to Estar would mark the third merger & acquisition (M&A) deal between Ukrainian and Russian steel assets within the last six months.
Consolidation between the Ukrainian and Russian steel sectors shifted into high gear in recent years as owners of steel assets in these countries moved to become more competitive with larger rivals.
Last December, Russia’s Evraz steel group announced it signed an agreement worth about $3 billion to purchase steel production and ore assets in Ukraine owned by Igor Kolomoisky and Gennadiy Bogolyubov. Both Ukrainian billionaires acquired cash and a minority stake in Evraz as part of the transaction.
In September, the Metinvest steel group controlled by Ukraine’s richest man, Rinat Akhmetov, announced it would merge the Ukrainian steel assets of Smart Group into its holding. Interests of the Russian-Ukrainian Smart Group are represented by billionaire Vadim Novinsky.
Since early last year, Industrial Union of Donbass (ISD) Corporation, one of Ukraine’s largest steel groups, has held talks on a merger with Russia’s Gazmetal steel group, controlled by Russian billionaire Alisher Usmanov. ISD is controlled by Ukrainians Serhiy Taruta and Vitaliy Haiduk.
Analysts said the Ukrainian and Russian steel groups are following in the footsteps of steel giants formed by past mergers. The most high profile merger driving consolidation within the industry came in 2006, when world leader Mittal Steel merged with Arcelor to form Arcelor Mittal.
ISTIL’s steel mill in Ukraine annually churns out up to 1 million tons of steel, a small fraction of Ukraine’s overall steel production. Globally, Ukraine ranks among the top ten steel producing and exporting countries.
