Russia's Evraz Group has abandoned plans to acquire control of Chinese steel maker Delong Holdings Ltd after a $1.5 billion option to raise its stake to 51 percent lapsed on Tuesday, the company said.
Evraz, Russia's second-largest steel maker by production, said in a statement anti-trust authorities in China had failed to ratify the transaction. The company currently owns 10 percent of Delong, which is listed in Singapore.
We may consider other options and start new negotiations, but this effectively means all previous agreements have expired, Evraz Investor Relations Director Alexander Boreyko told Reuters by telephone.
Evraz, in which billionaires Alexander Abramov and Roman Abramovich both own stakes, agreed in February 2008 to acquire up to 51 percent of Delong but has since encountered resistance from Chinese anti-trust authorities.
Such resistance to foreign ownership forced ArcelorMittal, the world's largest steel maker, to pull back from its plan to take over China Oriental in 2007.
We are interested in China, but the structure (of the deal) was not workable because of legislation, Boreyko said. He declined to specify what other options Evraz was considering in the world's largest steel-making country.
Delong's flagship business in located near Xingtai city in Hebei province, 430 km southwest of Beijing. The company employs more than 5,000 people and makes flat-rolled steel used in pipe making, infrastructure and the automotive industry.
It sells most of its steel in the Chinese market.
Delong posted a separate statement from Evraz on its website, delong.listedcompany.com, saying the call and put options on the deal had lapsed.
(Editing by Maureen Bavdek)