SSTEEL ... Jan10

Talk of Southern Steel Bhd being a takeover target is not exactly new. In 2009, rumours of a merger between Southern Steel and Ann Joo were speculating, but remained unsubstantiated.

Recently, after a strong run in the share price of both companies, talk of a merger emerged again.

And now, with the proposed privatization of Hume Industries by controlling shareholder Tan Sri Quek Leng Chan, rumours of a possible merger of Ann Joo and Southern Steel gained strength.

Hume Industries has a 41.46% stake in Southern Steel while Quek owns 43.2% directly and indirectly through Hume.

However, Ann Joo Resources denied that Ann Joo has been negotiations with Southern Steel and has no plans.

Nevertheless, if Southern Steel is indeed up for sale, who could buyers be?

Its market cap as at 15 Jan 2010 stood at about RM939 million, meaning that any party looking to take over would need deep pockets as the offer price would likely have to be at a premium.

It had net assets of RM1.68 a share. For nine moths ended Sept, the company posted a net loss of RM43.5 million.

Its second largest shareholder include NatSteel Holdings Pte Ltd owns about 27%.