POSCO wants to buy Asian steel maker
POSCO wants to buy Asian steel maker
POSCO Co Ltd is looking to buy an Asian steel maker as it fights for survival in the global market.

Seoul: POSCO Co Ltd, the world's fifth-largest steel maker, is looking to buy an Asian steel maker as it fights for survival in the global market after the mega-merger of Mittal Steel and Arcelor.

The formation of Arcelor Mittal, a giant capable of producing more than 100 million tonnes of steel a year, has spurred major steel makers to bulk up in defence.

POSCO also faces challenges from rapidly growing Chinese producers.

"In line with the M&A trend in the global steel industry, we are thinking of embarking on overseas M&As," POSCO Chief Executive Lee Ku-taek was quoted as saying by a spokesman.

"We are looking at a steel maker in Asia including China. We are closely studying a specific target and timing." Analysts welcomed POSCO's plan, saying an acquisition would strengthen the company's bargaining power in the global steel marketplace.

"The first target would be a Chinese or Indian steel maker. POSCO has plenty of cash to buy it," said Kim Kyung-joong, an analyst at Samsung Securities.

POSCO, which is estimated to have 1.5 trillion won ($1.57 billion) in cash, has been at the centre of various expansion rumours inside and outside the country as it seeks growth opportunities.

Purchasing foreign companies would also help to protect POSCO protect itself against hostile takeover bids.

"POSCO would be difficult to become a target of takeover of big steel companies like Mittal if POSCO's volume gets bigger with an M&A," Kim said.

Foreign investors own more than 60 percent of POSCO, leaving it more vulnerable to hostile takeover bids. The South Korean steel maker has already expanded capacity in India and is also seeking to expand ties with Nippon Steel Corp by increasing cross-shareholdings in each other.

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