ArcelorMittal raises its stake in Turkey's Erdemir

The shares were bought in transactions with Societe Generale, Nextgen Capital Limited and Credit Suisse International, the statement said.

"We are pleased to be making this strategic investment in Erdemir, which we see as a very attractive company in a rapidly growing economy with excellent prospects for further growth,” Sudhir Maheshwari, senior executive vice president of ArcelorMittal and a member of the company’s Group Management Board, said in the statement.  �

The army pension fund, Oyak, bought 49 percent of Erdemir shares for $2.8 billion in a privatization tender in 2005. The price of ArcelorMittal's lastest acquisition was 8.4 YTL ($ 6.69) per share. The value of the acquired stake is $869.25 million. Erdemir shares rose more than 6 percent in Tuesday's early trade to over 9 YTL.

Erdemir said there is no contact between Oyak and ArcelorMittal. "We have had no discussions with ArcelorMittal about any equity exchange between the two companies," the Financial Times quoted Aydin Muderrisoglu, Erdemir's vice-chairman, who is also a vice-president of Oyak as saying on Tuesday.

But Erdemir was "open to discussion" with any company - including ArcelorMittal - which was interested in cooperation over producing and selling steel, Muderrisoglu added.

ArcelorMittal's move seen as a reveal of its enthusiasm of boosting its presence in Turkey and the surrounding region, an area it regards as having strong growth possibilities in the next decade. "This shows that ArcelorMittal has its eye on Erdemir and looks like a step towards an acquisition," Kurthan Atmaca, an analyst at Istanbul-based Ekspres Invest, told Bloomberg.

The company had formed a joint venture with Turkey's Borusan to invest $500 million in the construction of a hot strip mill, which is planned to have a capacity of 4.8 million metric tons in 2010.

Since the privatization, Erdemir has spent $3 billion improving the quality of its steel and increasing output. Erdemir, which has plants on Turkey's Black Sea and Mediterranean coasts and another in Romania, produced 5.4 million metric tons of steel last year and plans to invest $4.2 billion by 2012 to increase capacity.

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