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Russian steel company Severstal to list in London before year-end

Russian steel company Severstal to list in London before year-end

MOSCOW _ Steelmaker OAO Severstal announced plans Friday to list its shares in London by the end of the year and improve its corporate governance, sprucing up its international image as it prepares to look for new merger partners.
Chairman Alexey Mordashov, who tried to merge the company with Arcelor SA earlier this year before losing out to Mittal Steel Co. NV, said he was eying combinations that could make Severstal at least the world's No. 2 steelmaker.
The company, which is one of Russia's largest steelmakers with iron ore and coking coal mining divisions, gave no details of size or value of the float. Media reports have said it is expected to list a 10 percent to 15 percent stake at a price that would give it a US$10 billion to US$20 billion (euro8 billion to euro16 billion) market capitalization when listed.
But before the listing happens Mordashov _ who controls 90 percent of the company _ said he would take steps to shore up the company's image: Under his stewardship Severstal has been criticized for riding roughshod over minority shareholders.
Mordashov said Friday that he would appoint an independent board chairman and move into the position of chief executive. And the shares to be listed would come out of his own stake _ diluting his interest in the company.
"Severstal will pick someone who has a good profile with investors" as chairman, he was quoted as saying by Dow Jones Newswires. Five of the 10 member board would be independent directors, he said.
Analysts, however, suggested that the damage may already have been done.
"I think investors have sent back a message saying: 'You won't get your IPO ... given your shocking corporate governance record,'" said Michael Kavanagh, an analyst with the MDM investment bank. "For me it's too little, too late."
Kavanagh noted that the offering would need to be priced attractively to succeed.
Arcelor shareholders voted down a merger with the Russian company on June 30. That cleared the way for Mittal's deal to form a steel titan with nearly 10 percent of global production.
At the time Severstal vowed to seek out "new opportunities for development in line with the previously announced aim of world leadership in steelmaking."
Severstal has been rumored this week as a possible counter-bidder for Corus Group PLC after India's Tata Steel Ltd. said it was interested in acquiring the Anglo-Dutch steel company.
Mordashov did not comment on a possible bid for Corus but said he intended to make Severstal a world leader. "There are a lot of potential partners for our company," he said.
Analysts suggested that a Russian steel giant to rival Arcelor-Mittal could already be in the works.
According to Kavanagh, Russian billionaire Roman Abramovich's acquisition of a 41 percent stake in Russian steelmaker Evraz Group SA in June suggested that the Kremlin-loyal tycoon could be looking to steer it into a merger with Severstal.
That would suit Russian President Vladimir Putin's strategy of promoting Russian corporations capable of challenging established international players.
"There is the political will for Russia to play the role of some kind of superpower and that requires companies to step up and do something about it," Kavanagh said.


Updated : 2021-01-28 17:28 GMT+08:00