MOSCOW, May 25 (RIA Novosti) - Leading Russian steelmaker Severstal [RTS: CHMF] said Friday it has agreed to buy a 25% stake in Severgal from Arcelor Mittal, the world's second-largest steelmaker.
Severgal, based in Cherepovets in central Russia, is a joint venture of Severstal and Arcelor.
Severstal CEO Alexei Mordashov, who controls 82.6% of Severstal, said the deal will give Severstal a 100% stake in Severgal, increasing the company's value and improving management and production effectiveness, adding that the company would be more attractive to investors.
Severstal sought a merger with Arcelor, but the deal fell through when it was rejected by Arcelor shareholders last June to clear the way for a takeover of the Luxembourg-based company by the world's largest steel company, Mittal Steel. Arcelor paid Severstal 140 million euros (about $180 million) in compensation.
Severstal's net profit, calculated to International Financial Reporting Standards (IFRS), declined 30%, year-on-year, in 2006, to $1.2 billion.
The company's net profit, calculated to Russian Accounting Standards (RAS), grew 2.3%, year-on-year, in 2006, to 36 billion rubles (about $1.35 billion).
