Arcelo and Nippon Steel Join Bidding for Insolvent Essar

The world's largest steelmaker ArcelorMittal and a top steelmaker in Japan will form a partnership to bid for Essar Steel India Ltd., an insolvent producer that could raise at least $ 6 billion.

Arcelor and Nippon Steel & Sumitomo Metal Corp. said they have joined the bidding process for Essar, which is in the process of entering an Indian government process to clear companies that are unable to pay off their debts.

Luxembourg-based Arcelor will become the majority partner, Nippon Steel president Kosei Shindo said at a press conference in Tokyo, calling the venture "almost 50:50". He said bidders want to target demand from the construction industry, which benefits from massive infrastructure penetration from the Indian government, which could triple the country's steel capacity.

The joint acquisition by the companies depends on whether their plan is chosen and accepted by the Indian courts. Essar is the largest troubled steelmaker traded under the program and is also the subject of a bid from the state-controlled VTB Group.

Arcelor and Nippon Steel have operated joint ventures in America since 1987 and partnered with another purchase in the United States in 2014. In a statement, Lakshmi Mittal, Chief Executive Officer of Arcelor, pledged a “quick turnaround in Essar's performance,” a rich history of positive cooperation with the Tokyo-based company.

Advisors evaluating bids for Essar recommended last month that both Arcelor and VTB should be disqualified after being asked if they meet the bidding criteria.