King & Wood Mallesons has represented BlueScope Steel, Australia’s largest steel manufacturer, on a $1.36 billion 50:50 joint venture agreement with Japan’s Nippon Steel Corporation, advised by Clayton Utz.
BlueScope is expected to sell half of its Southeast Asian and North American building products businesses to Nippon Steel Corp for $540 million in cash, which will be reorganised into a 50:50 joint venture to form NS BlueScope Coated Products. The new business, to be headquartered in Singapore, will make coated steel products and supply whitegoods to Asia's fast-growing middle class.
Melbourne M&A partner Diana Nicholson led the King & Wood Mallesons team on the transaction, supported by Hong Kong-based partners Simon Milne and Brad Galvin, Shanghai partner Martyn Huckerby, and partner Cheng Lim in Melbourne.
Meanwhile, corporate practice head Graham Taylor headed Clatyon Utz’s team in Sydney. Partner Linda Evans advised on competition matters, while partner Jim FitzSimons assisted with IP issues.
Nippon Steel said in a statement that the deal would open the way for it to meet demand from the building and construction fields in Southeast Asia and North America, as well as capturing new markets, such as home appliances.
Australian steelmakers have been hard hit by falling prices and a high Australian dollar, which has traded above parity with the U.S. dollar for much of the past year, making imported steel cheaper for major construction projects.
“There is a tremendous amount of Japanese manufacturing investment relocating from Japan into Asia, and being a supplier to that segment is a real opportunity for us,” BlueScope chief executive Paul O'Malley told analysts.
“From Nippon's perspective, they get to accelerate the speed with which they supply their customers across Southeast Asia, and from our perspective there are a number of markets that we couldn't ever hope to enter that we now can enter,” he said.
BlueScope has had a technical collaboration with Nippon for some 40 years, and built up its own business in ASEAN nations over that time, reports Reuters. The joint venture does not include BlueScope's building products businesses in Australia, China or India.
Nippon is expected to become the world’s second-largest steel manufacturer following the completion of its merger with Sumitomo Metals.
Kanishk Verghese is North Asia journalist at ALB. Follow us on Twitter: @ALB_Magazine.
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