JSW Steel today said it has completed the merger of JSW Ispat Steel with itself and the amalgamation came into effect from June 1.
With the completion of merger, JSW Steel has become the second largest steel producer in the country after state—owned Steel Authority of India (SAIL) with 14.3 million tonnes capacity.
The company, led by Sajjan Jindal, had announced merger of JSW Ispat into itself in September last year.
“With reference to the earlier announcement... JSW Steel has now informed BSE that... the Scheme has become effective from June 1, 2013, upon filing of the certified copy of the order of the High Court of Bombay with the Registrar of Companies, Maharashtra, Bombay,” it said in a BSE filing.
JSW Ispat also communicated the same to the stock exchanges through a separate filing.
The Bombay High Court had approved the composite scheme of amalgamation and arrangement amongst the two companies and their shareholders and creditors on May 3, 2013. Shareholders and creditors of the two companies had approved the merger on January 30.
As per the merger scheme, shareholders of JSW Ispat would get one JSW Steel share for every 72 shares they hold.
Moreover, JSW Ispat was to transfer its Kalmeshwar undertaking and JSW Steel was to transfer its downstream undertaking to JSW Steel Coated Products. Besides, JSW Building Systems was to be merged with JSW Steel.
Post-merger, JSW Steel promoters will now hold a little over 35 per cent stake in the company.
JSW’s second largest shareholder JFE Steel holdings will now come down to 14.92 per cent. JFE had about 15 per cent stake in JSW Steel till the time of merger announcement in September last year.
However, it was not clear how much stake Pramod and Vinod Mittal —— the erstwhile promoters of JSW Ispat—— will have in the merged entity as they have offloaded their significant stake in JSW Ispat in last few months.
JSW Steel had acquired 41 per cent stake in debt—ridden Ispat Industries from the Mittal brothers —— brothers of the steel czar L N Mittal—— for about Rs 2,157 crore in December 2010. Subsequently, Ispat was renamed as JSW Ispat.
Later, JSW increased its stake to 46.75 per cent in JSW Ispat and was the single—largest shareholder of the company.
Through merger, JSW Steel is aiming at various benefits, including synergy in operations and reducing the borrowing cost of JSW Ispat by Rs 250 crore.
Post today’s announcement, JSW shares rose 1.93 per cent on the BSE to close at Rs 693.90. JSW Ispat shares closed 2.15 per cent up on the BSE at Rs 9.49.