China's Fangda Group expresses interest in acquisition of Anyang Group

China's Fangda Iron and Steel Group has showed its interest in the acquisition of the state-owned steel company Anyang Group, according to a latest Lange report. The latter has an annual steel production capacity of more than 10 million tonnes (mnt).

At present, Fangda Iron and Steel Group is the only bidder, though previously many other private steel mills showed their interest to acquire the company.

Anyang Group has total assets of RMB 56.32 billion and net assets of more than RMB 15 billion. In 2021, it achieved an operating revenue of RMB 76.3 billion and a net profit of RMB 2.13 billion.

This acquisition is a part of the effort for Fangda Group to optimise its layout after acquiring Dazhou Iron and Steel in south eastern China's Sichuan province, which is conducive to improving the group's product structure and regional market layout.
After the acquisition, the production capacity of Fangda Group may exceed 30 mnt, becoming the seventh largest steel company in China.

From the perspective of product structure, Anyang Group produces a wide variety of steel products which include medium and heavy plates, cold rolling coils, hot rolling coils, high-speed wire rod, sections, bars and nodular cast pipes. After the integration, the product chain of Fangda Group, which only produces medium and heavy plates, will also be improved.

Other mergers and acquisitions

With frequent policies being rolled out, the integration of the Chinese steel industry has been accelerated.

A market insider from Tangshan said, "At present, the steel industry implements de -capacity and capacity swapping. Large steel enterprises are actively carrying out mergers and acquisitions to improve production capacity, so as to deal with the future technological transformation and upgrading, capacity swapping and reduction. At the same time, the merger and reorganisation of the industry is also conducive to the supervision and management of the industry."

Apart from Anyang Steel Group, Shougang also announced at the beginning of the year that it would purchase 49% equity of Shougang Steel Trade Investment Management Co., Ltd. held by the controlling shareholder by issuing shares, with a transaction price of more than RMB 5.8 billion. China Baowu Group is also in talks with Shandong Iron and Steel Group for a potential merger. Recently, Fujian Fuhua and Tongkang Metal also completed their merger.