The world's largest steel producer, Mittal Steel Co., bought Ukraine's flagship steel plant Kryvorizhstal in a televised privatization auction Monday for more than $4.8 billion.
The high-stakes auction had been a campaign promise of President Viktor Yushchenko, part of his bid to prove to investors that the former Soviet republic is committed to transparency and open for foreign investment. Yushchenko was there to watch.
Mittal Steel bought the mill for 24.2 billion hryvna, well above what analysts had predicted and more than five times what former President Leonid Kuchma's son-in-law and another Ukrainian tycoon paid for the mill in 2004 - a sale Yushchenko called a theft.
The sale of Kryvorizhstal, which produces 20 percent of Ukraine's entire metal output, becomes the single largest foreign investment ever in this former Soviet republic.
Competing against Netherlands-based Mittal was the Industrial Group Consortium, which brings together the Industrial Union of Donbass and the world's second-largest steel producer, Luxembourg-based Arcelor SA, as well as the Ukraine-registered LLCSmart-Group.
The auction began with all three companies sticking sealed envelopes in a glass bin. State officials pried open the case and using scissors and sliced apart the envelopes to read the starting bids. The consortium linked to Arcelor had offered the highest starting price, 12.6 billion hryvna (about $2.5 million).
The sale then went to an open auction.
Bidding was feverish. Representatives of the three competing companies sat at separate desks and raised white placards to hike the price up in 100 million hryvna increments. The main bidding soon was between Mittal and the Arcelor consortium.
As the bidders raised the price, people in their teams frantically worked the phones. The mood was tense, with the auctioneer repeatedly going down to "one ... two ..." before a bidder stepped in and raised the price again.
Former Prime Minister Yulia Tymoshenko, who had spearheaded the privatization effort, flashed a huge smile when the bidding ended.
Monday, October 24, 2005
Here's the latest on Kryvorizhstal, from the AP: