China Steel Corp (中鋼), Taiwan’s biggest steelmaker, will assist Formosa Plastics Group (FPG, 台塑集團) in building a steel mill in Vietnam, a local newspaper reported yesterday, citing people close to the situation.
The two sides are expected to talk on the collaboration tomorrow, when top FPG executives pay a visit to Kaohsiung-based China Steel, the Chinese-language Economic Daily News reported.
FPG representatives will be led by William Wong (王文淵), the group’s chief executive officer, who is also chairman of Formosa Chemicals & Fiber Corp (台灣化學纖維).
The FPG delegation will also include Formosa Petrochemical Corp (台塑石化) chairman Wilfred Wang (王文潮), Formosa Plastics Corp (台灣塑膠) president Lee Chih-tsuen (李志村), Nan Ya Plastics Corp (南亞塑膠) chairman Wu Chin-jen (吳欽仁), Formosa Heavy Industries Corp (台朔重工) chairman Wu Kuo-hsiung (吳國雄) and Kuo Yen-tu (郭炎土), a former China Steel chairman who is now an adviser to FPG.
Since the beginning of the year, rumor has been spreading in the local stock market that FPG, the nation’s largest industrial conglomerate, planned a hostile takeover bid for China Steel.
Last month, the market heard rumors that FPG was spending NT$40 billion (US$1.2 billion) to buy a 20 percent stake in China Steel in a bid to gain control of the company with an eye on its steel technology and professionals.
Both companies denied the rumors at the time. Against this backdrop, tomorrow’s visit by FPG executives was expected to attract investor attention and it could create more share-gain momentum ahead of the steel maker’s annual general meeting on June 19, the paper said.
Shares of China Steel have traded up 16.45 percent so far this year, closing at NT$26.9 on Friday. Shares of Formosa Plastics Corp (台塑), the world’s second-biggest maker of polyvinyl chloride (PVC) and the group’s flagship entity, have jumped 43.81 percent to NT$62.7 over the same period, Taiwan Stock Exchange’s data showed.
It has been more than two years since FPG first announced its plan to invest in building a steel plant in Vietnam. The newspaper report said the group planned to invest an estimated US$8 billion to build a plant with an annual capacity of 30 million tonnes.
To save on construction costs, the group has reportedly assigned the construction work to its subsidiary, Formosa Heavy Industries, based on a blueprint by China’s Chongqing Iron & Steel Design Institute (重慶鋼鐵設計院).
China Steel president Chen Yuan-cheng (陳源成) said the company expected to cooperate with the group because it also planned to invest in a cold roll mill in Vietnam, the report cited Chen as saying.
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