Partial merger boosts Hyundai Steel capabilityHyundai Steel is taking over its affiliate Hyundai Hysco’s cold-rolled steel plate manufacturing and sales business.
The nation’s second-largest steelmaker under Hyundai Motor Group said yesterday its board has approved the move as part of the company’s plan to have an integrated steel mill after completion of its third furnace last month.
Hyundai Steel said it will acquire Hyundai Hysco’s Dangjin plant in South Chungcheong and its Suncheon plant in South Jeolla. With the partial merger, Hyundai Steel will join Posco as the second Korean company to perform the full process of making iron and steel, and hot- and cold-rolled steel plates.
Previously, Hyundai Hysco bought hot-rolled steel plate from Hyundai Steel and reprocessed the plate.
“By integrating the manufacturing process, we will be able to remove inefficiencies in management, production and sales,” Hyundai Steel said in a release. “It also creates synergy and a platform to improve the company’s value.”
The company said a partial merger will also enhance sales while decreasing operation costs and payable interest. Hyundai Steel’s annual sales are expected to top 20 trillion won ($18.7 billion) from the current 14 trillion won.
According to industry sources, Hyundai Steel’s debt has exceeded 11 trillion won this year following the construction of the steel mill in Danjin. However, the company is expected to generate 150 billion won quarterly with the acquisition of the cold-rolled steel plate business.
Hyundai Hysco will continue to make steel pipes and pursue lightweight automobile business such as hot stamping, and carry on with the distribution of other steel products to overseas plants of Hyundai Motor and Kia Motors. Hyundai Steel believes the partial merger will boost its R&D effort.
BY JOO KYUNG-DON [email@example.com]
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