Tata Steel's proposed acquisition of Vietnam-based Vinausteel and Structural Steel Engineering may snowball into a legal battle between its subsidiary NatSteel and the two companies' parent, Vietnam Industrial Investments, over a possible breach of the purchase agreement.
Problems arose in May when Prudential Vietnam Securities Investment Fund Management Company launched an unsolicited offer of $13.3 million, 10.65 per cent higher than NatSteel's, to acquire a majority stake in the two companies.
VII's independent directors felt that the Prudential offer had more certainty and demonstrably better terms than NatSteel's. A VII AGM is slated for June 21 for vote on the competing offers.
"We have sent them a communication saying that it would be a breach of the sale and purchase agreement if they went ahead with the other bid," a Tata Steel spokesperson said.
Tata Steel announced in March that NatSteel would acquire 100 per cent in a 250,000 tonne bar/wire rod mill of SSE Steel and 70 per cent in Vinausteel, which produces 180,000 tonnes of reinforcing bars, at an enterprise value of around $41 million.
The transaction was to be completed by June.