Mitsui, G Steel in talks on partnership

Mitsui, a leading steel trader in Japan and Thailand, has proposed jointly investing with G Steel and becoming its strategic equity partner.

"We're both in talks about the stake in the company," G Steel director Somsak Leeswadtrakul said yesterday.

Mitsui's move was aimed at strengthening its business and paving the way for foreign-market penetration, he said.

Negotiations will be finalised this year, he said.

G Steel's board has approved the offer in principle and asked management to proceed on such details as the price and number of shares, the company said yesterday in a filing with the Stock Exchange of Thailand.

A steel-industry source said the Mitsui Group could expand its distribution channel and G Steel boost its competitiveness internationally.

G Steel would benefit from greater access to funds and lower material costs, because Mitsui is the largest trading firm in Japan and one of the leading trading houses in the world, the source said.

Mitsui has a large base of Japanese customers in the automobile and electrical industries. It imports up to 3 million tonnes of steel a year, while G Steel has a capacity of 5 million tonnes of steel a year.

"G Steel may not open a large shareholding for only Mitsui, because it wants more foreign partners that can support techniques in steel production," the source said.

G Steel is expected to sell its shares to Mitsui via a share-capital increase, because that would help the company get more cash flow, the source said. The Leeswadtrakul Group, the majority shareholder, also does not want to sell its stake in the steel-coil manufacturer to Mitsui.

G Steel earned a first-half net profit of Bt5.43 billion on revenue of Bt21.37 billion.