Bekaert, a worldwide technological and market leader in drawn steel wire products and advanced coatings, and Southern Steel Berhad (SSB), a leading Malaysian Steel Group, signed an agreement to establish a joint venture, 55% owned by Bekaert and 45% by SSB.
SSB will inject its interests in Southern Wire Industries Malaysia Sdn Bhd (SWI) and Southern Speciality Wire Sdn Bhd (SSW) into the joint venture, while Bekaert will bring in the galvanized wire activity platform which today is part of PT Bekaert Indonesia.
Henri-Jean Velge, Bekaert Group Executive Vice President Wire, stated: “Developing a partnership with Southern Steel will create a production and sales platform for our joint wire and ropes activities in South-East Asia that responds to our ambitions for growth in the region.”
Dr. Tan Tat Wai, Group Managing Director of Southern Steel Berhad, added: “This joint venture will enable us to leverage our mutual capabilities and technological expertise, for the benefit of the new organization and of its customers.”
The activities of Southern Steel’s wire operations encompass two production plants in Malaysia; one in Shah Alam and one in Ipoh. The product portfolio includes a wide range of galvanized and specialty steel wires and ropes, and complements Bekaert’s existing product range of steel wires manufactured in its wire plant in Karawang, Indonesia.
The deal focuses on serving customers in the growth markets of the Association of Southeast Asian Nations (ASEAN).The transaction, with an enterprise value of approximately € 47 million (USD 63 million), is subject to customary closing conditions and is expected to be completed in the third quarter of 2012. The financial statements of the joint venture which will be named Bekaert Southern Wire Pte Ltd. with registered office in Singapore, will be integrated in Bekaert’s consolidated statements in line with closing terms and conditions. Based upon the 2011 turnover, the deal would add approximately € 60 million in annualized sales.