India's Sterlite Industries
of bankrupt copper miner Asarco for $2.6 billion, the latest in
the series of overseas acquisitions by Indian firms.
Tuscon-based Asarco, the third largest copper maker in U.S.
had total revenue of $1.9 billion in 2007, Sterlite, a unit of
Vedanta Resources Plc (VED.L) said in a statement.
"Asarco is a strategic fit with Sterlite's existing copper
business," the Indian firm said in the statement.
On Friday a lawyer close to the deal had told Reuters in
New York that Vedanta had signed a $2.6 billion deal to buy the
assets of Asarco.
Asarco, formerly known as American Smelting and Refining
Co, produced 235,000 tonnes of refined copper in 2007 and its
mines have an estimated reserve of 5 million tonnes of
It filed for bankruptcy protection in 2005 after it was
sued for $1 billion over environmental and asbestos claim.
Sterlite, is India's top non-ferrous metals and mining firm
with interests in aluminium, copper, zinc and lead.
The deal, subject to the approval of a U.S. Bankruptcy
Court, will be funded through a mix of debt and existing cash,
Last June, it had raised $1.75 billion in American
depositary shares to pay for possible acquisitions and cut
Indian firms coming of years of strong profitable growth
and clean balance sheets that aid easy access to capital have
been snapping up overseas firms to expand their presence
Cellular firm Reliance Communications Ltd (
started talks with South Africa's MTN (MTN.J) that could
culminate in the creation of a $66 billion telecom group.
Tata Steel (
takeover to date, a $13 billion purchase of Anglo-Dutch steel
maker Corus Group and aluminium maker Hindalco Industries
Tata Motors (
Land Rover Brands from Ford Motor Co (F.N) for $2.3 billion.
Indian firm have announced outbound merger and acquisition
deals worth $7.1 billion so far in 2008, Thomson Reuters data
ABN AMRO advised Sterlite and it was Lehman Brothers
(LEH.N) for Asarco, the statement said.
Shares in Sterlite, which has a market value of $15.6
billion, ended 2.8 percent down at 934.90 rupees on Friday in a
firm Mumbai market.
(Reporting by Narayanan Somasundaram, Nidhi Verma and
Devidutta Tripathy; Editing by Louise Heavens)
The global economy is threatened by
continuing weaknesses in the U.S. economy and rising energy and
raw materials prices, European Central Bank Governing Council
member Mario Draghi said on Saturday.
Draghi told a Bank of Italy meeting that ECB policy
remained "firmly focused on the objective of price stability."
"The greatest threat to the world economy now comes from
the build-up of inflationary pressures and the possible
worsening of the American slowdown," Draghi, who is also Bank
of Italy governor, said, according to a text released in
Noting that euro zone inflation rose to an average 3.3
percent in the first quarter, Draghi said: "The latest figures
point to a further acceleration."
Data released on Friday showed euro zone inflation surged
to 3.6 percent in May.
"Nevertheless, the rise in domestic prices has remained
modest and no wage-price spiral has developed to date," he
"Today the European Central Bank is keeping monetary policy
firmly focused on the objective or price stability over the
medium term," he added.
(Reporting by Robin Pomeroy; Editing by Louise Heavens)
U.S. Treasury Secretary Henry Paulson
said on Saturday the dollar peg for currencies in the Gulf Arab
countries had served the region well and any changes to the peg
would be a sovereign matter.
Dollar pegs in all Gulf Arab states except Kuwait force
their respective central banks to match U.S. interest rate
cuts, and has helped fuel inflation as their economies are
booming due to record oil prices.
This also reduces their purchasing power for goods
denominated in other currencies.
Asked about his concerns over the dollar peg, Paulson, on a
visit to Saudi Arabia, Qatar and the United Arab Emirates, told
a news conference:
"That is a sovereign decision ... The dollar peg, I think,
has served this country (Saudi Arabia) and this region well.
That speaks for itself."
Qatar's top economic policy adviser Ibraham al-Ibrahim was
quoted late on Friday as saying that Qatar must de-link its
currency from the dollar peg.
But Saudi Finance Minister Ibrahim al-Assaf, who joined
Paulson in the news conference after a series of meetings,
reaffirmed his commitment to the dollar peg.
"We have no intention of depegging or revaluation," Assaf
said. "As Mr. secretary (Paulson) said ... it's a position that
has served us well. (The peg to the dollar) has served us well
and we look at the long-term interest of Saudi Arabia,"
Turning to the price of oil, which hit a record high of
more than $135 a barrel last week, Paulson reiterated his calls
for additional investment in oil producing countries,
particularly from foreign sources, to help increase production.
"There is no doubt that the current prices are a burden on
economies around the world and a burden on people around the
world," Paulson said.
Assaf agreed, saying Saudi Arabia was investing billions of
dollars to increase both upstream crude oil production and
downstream refining capacity to help meet global demand.
"We don't like these extreme volatilities in the (oil)
market. They are not good for the consuming countries and they
are not good for the producing countries."
(Reporting by David Lawder and Souhail Karam; editing by