JSW Steel to buy Italy-based Aferpi for ₹600 crore

Having lost the race to acquire the stressed assets of two Bhushan group companies, JSW Steel is all set to buy out Italy’s second largest steel producer, Aferpi, formerly known as Lucchini SpA, in a deal worth ₹600 crore.

JSW Steel has been in talks with Algeria-headquartered Cevital Group on the acquisition for the last six months and is expected to make an announcement after closing the deal early next month, said sources tracking the development.

An email sent by

BusinessLine to the company for comments on the deal remained unanswered till the time of going to press. Earlier, Tata Steel had pipped JSW Steel, promoted by Sajjan Jindal, by placing an aggressive bid to buy out the stressed assets of Bhushan Steel and Bhushan Power and Steel.

However, uncertainty lingers over the Tata Steel bid for the Bhushan assets as global metal major Liberty House has moved the National Company Law Tribunal against the Committee of Creditors’ decision not to open its bid, which was placed after the deadline but before other bids were opened.

Eye on Italy

JSW Steel has been eyeing Italy’s two largest steel producers, Ilva and Lucchini, which went belly up due to the sudden fall in steel demand after the 2008 economic recession in Europe. In 2012, they were declared bankrupt and put on the block.

Considered a value buyer, JSW Steel did not place aggressive bids and lost Ilva to ArcelorMittal and Lucchini to Cevital Group. Last August, it initiated talks with the Cevital Group to buy out Lucchini, which was renamed Aferpi (Acciaierie e Ferriere di Piombino).

Aferpi, originally owned by Russia’s Severstal, has an annual steel production capacity of about 2.5 million tonnes in Piombino.

EV plans

It produces speciality long products for European railways, bars for specialised auto industry parts and wire rod mills.

The acquisition of Aferpi by JSW comes at a time when its group company, JSW Energy, is gearing up for electric car production in India.

A foothold in Europe, one of the largest electric car markets, will enable the group to gain technical knowhow in electric vehicle production and localise manufacture of components much faster, said an analyst.

JSW Energy plans to invest about ₹4,000 crore to produce e-vehicles in Gujarat and is scouting for a joint venture partner.

It plans to roll out the first electric vehicle by 2020.