China’s Citic Pacific Special Steel to Buy Parent of UK Steel Trader Stemcor for USD2.1 Billion

(Yicai) Dec. 31 -- Citic Pacific Special Steel Group, a Chinese maker of special steels, plans to invest CNY1.5 billion (USD2.1 billion) to acquire the parent company of Stemcor Global Holdings, one of the world’s top three independent steel traders, to widen its global footprint.The acquisition will be completed through the purchase of 100 percent equity in Prosperity Kingsfield, the holding platform of the target asset, the Jiangsu province-based buyer announced yesterday.Citic Special Steel said the transaction represents a key step in building a global operating system anchored by a mature international platform. By integrating the supply chain resources of both parties, the company expects to establish a diversified and risk-resistant global supply chain network and a compliant, efficient overseas operating platform.Stemcor is a London-based independent steel trading and distribution company with more than 70 years of history. Its business covers the procurement and sale of upstream raw materials, including iron ore, coking coal, pig iron, and scrap steel, as well as steel products such as billets and special steel. The company also provides value-added services, including supply chain management and financial services, according to the announcement.Unaudited financial data show that Prosperity Kingsfield has recently faced weaker operating performance. Net cash flow from operating activities was negative CNY54.7 million (USD7.5 million) in the first three quarters of this year, while net profit stood at CNY8.3 million (USD1.1 million). In the previous full year, the company recorded a net operating cash flow of CNY93.3 million and a net profit of CNY35.1 million.Stemcor has been under Chinese ownership for years. Chinese conglomerate Cedar Holdings acquired 100 percent of Stemcor from an American investment consortium led by Apollo Global Management in June 2020, before transferring the asset to Guangzhou Airport Industry Investment Group, a state-owned industrial development company, in January 2024.Citic Special Steel added that the acquisition is expected to enhance its bargaining power within the global industrial chain, improve the stability of its supply chain and business operations, strengthen cross-border risk management and profitability, and raise brand awareness and influence in international markets.Citic Special Steel [SHE: 000708] closed 1.3 percent elevated at CNY16.37 (USD2.30) after rising by nearly 2 percent earlier today.Editor: Emmi Laine