Guangzhou-based Cedar Holdings has bought UK-based Stemcor, one of the world’s largest independent steel trading groups, in the latest foray by a Chinese company into Britain’s steel sector.
The Chinese group paid about $150m for privately owned Stemcor, according to one person familiar with the matter.
Steve Graf, chief executive of Stemcor, told the Financial Times: “I’m very happy, they will be a good shareholder and have a lot of experience.”
The move follows Chinese industrial conglomerate Jingye’s rescue of British Steel for $50m last year.
Questions have been raised about the interest of Chinese companies in the industry, given past cases of Beijing steelmakers dumping underpriced products into the EU market.
Mr Graf said he had no concerns about being bought by a Chinese company in the light of mounting imports of cheap metal, coupled with the US-China trade war, that have contributed to falling profits for some UK steelmakers.
“Cedar is an aspirational company, a good fit for Stemcor. As we tidied up our balance sheet a few years ago, we gave up our market share. With a single shareholder focused on the business, we’ll be able to grow back some of our market share,” he said.
Completion of the deal is conditional on approval from authorities in Beijing.
Gang Han, vice-president of Cedar, said the company was “dedicated to building a world-leading commodities group. The transaction is a win-win result where complementary benefits will emerge.”
Stemcor sells raw materials and logistics services and was founded by Hans Oppenheimer, the late father of UK Labour MP Margaret Hodge in 1951.
The group was one of Britain’s biggest private companies but later faced financial difficulties and in 2013 defaulted on an $850m loan.
Two years later Stemcor was split into two separate businesses, with Stemcor Global Holdings, controlled by a group of 20 shareholders, continuing the core trading activities.
US private equity group Apollo, along with funds Monarch and DE Shaw, hold more than 70 per cent of the group.
Since 2017 the group has closed the turbulent chapter and made profits — adjusted pre-tax profits rose 52 per cent to $18m in 2018.
“We’ve been in a very healthy position in the past two to three years and have made money since the creation of Stemcor,” said Mr Graf. “We have a very solid balance sheet and solid business, and having Cedar as a sole shareholder is a natural next step.”
British industrialist Sanjeev Gupta had previously bid to buy the trading and logistics business, but Mr Graf said Cedar was the most natural fit.
The Chinese group has revenues of more than $40.6bn and interests spanning chemicals, commodities and property.
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January 22, 2020 at 01:49AM
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