The LNM Group, headed by India-born steel tycoon Lakshmi Mittal, has teamed up with its former rival US Steel to make a bid for the control of Ukraine's biggest steel-maker Kryvorizhstal, which is expected to be privatised next month.
Ispat Karmet, a member of LNM Holdings operating in Kazakhstan, and Ispat Polska Stal, another member of LNM Holdings operating in Poland, will also be part of the consortium, a spokesperson of LNM said in London on Wednesday.
Kryvorizhstal is Ukraine's leading steel company, producing in excess of six million tonnes annually.
According to the tender issued by the State Property Fund of Ukraine, 93.02 per cent of shares in the open joint stock company will be sold in the privatisation.
The Ukrainian government has set a starting price of $714 million for the tender but it is thought that the bidders will be prepared to pay up to $1 billion for Kryvorizhstal's iron ore mines and 6 million tonnes of annual steel production.
Bids are to be submitted by June 4 and the government is expected to make a decision by June 11.
Commenting on the joint bid, Lakshmi N Mittal, Chairman of LNM Group, said: "Together, LNM and US Steel can offer a very strong partnership for Kryvorizhstal and we hope this strength will be recognised by the State Property Fund in Ukraine. There has been much comment over the criteria for the current tender process."
"This is an international tender and as such we expect the SPF to ensure that international businesses be given the opportunity to participate in a fair and open tender.
"We believe that LNM has the proven experience, financial strength and international standing required to give Kryvorizhstal a solid and profitable future in the world steel markets. This position is further enhanced by US Steel, one of the world's leading steel companies," Mittal said.
US Steel Chairman Thomas J Usher said: "We are pleased to team with LNM in bidding for Kryvorizhstal. Together our companies bring an unmatched level of expertise and excellence that will enhance Kryvorizhstal. Both companies have demonstrated that they can successfully acquire and operate former state-owned facilities and make valuable contributions to the communities and nations in which they operate."
LNM, the world's second largest and most global steel producer, and US Steel, the world's sixth largest steel producer, together can offer a wealth of experience and knowledge to Kryvorizhstal. They have combined worldwide steel production of about 60 million tonnes and annual coke production of about 20 million tonnes.
US Steel also enjoys a prominent position in Central and Eastern Europe, having successfully acquired US Steel Kosice in Slovakia and USS Sartid in Serbia.
LNM has particular experience in privatisations, having successfully completed 13 privatisations around the world. It has a leading position in Central and Eastern Europe with 14 million tonnes of production, following the acquisition of Ispat Sidex in Romania, Ispat Nova Hut in the Czech Republic and Ispat Polska Stal in Poland.
LNM has also recently acquired the finishing facilities of Balkan Steel in Macedonia and has submitted a bid for BH Steel in Bosnia.
According to sources, plans to sell Kryvorizhstal have met protests from the Ukrainian parliament.
Opposition leaders have accused Ukrainian President Leonid Kuchma of trying to sell the steel company too cheaply to 'oligarchs' in order to guarantee their support in a forthcoming presidential election.
Kuchma, who is planning to step down, is supporting the campaign of his prime minister Viktor Yanukovich, a former governor of the coal-and-steel producing Donetsk region.