Baowu Group reached agreement with Shanxi State-owned Capital Operation Co Ltd on Friday to take a 51% stake in TISCO, a filing on the Shenzhen Stock Exchange by TISCO subsidiary Shanxi Taigang Stainless Steel (000825.SZ) said.
The 51% stake is worth 14.5 billion yuan ($2.10 billion), based on an audit of TISCO’s net assets, although Baowu will not pay anything as the deal is a state-backed restructuring.
China, the world’s biggest steel producing country, has called for steel consolidation to achieve orderly market competition and reduce emissions.
The agreement will make China’s State-owned Assets Supervision and Administration Commission an indirect shareholder in TISCO via its 100% ownership of Baowu, the statement said.
Since its creation through a merger of Baoshan Iron & Steel and Wuhan Iron & Steel in 2016, Baowu Group has expanded by acquiring Maanshan Iron & Steel (600808.SS) in 2019 and aims to take control of Chongqing Iron & Steel (601005.SS).
