MARCH 14 - Japan's Kobe Steel will buy a small stake in steel pipemaker Man Industries and will jointly explore opportunities in the global steel pipe market, the Indian company said on Wednesday.
As part of the agreement, Japan's No.4 steelmaker will buy 3.25 percent stake in Man Industries to invest about $6 million at 165 rupees per share, a nearly 40 percent premium to the current market price.
The two companies will continue to explore long-term strategic partnership, Man said.
Ahead of the announcement, shares of Man Industries, which have a market capitalisation of $122.6 million, ended up 7.8 percent at 119.4 rupees in a Mumbai market that closed 0.6 percent higher.
Lured by India's growing status as a small-car hub, Japanese steel makers have been investing in their Indian peers.
In 2010, JFE, the world's No.5 steel maker, had bought 14.9 percent in India's JSW Steel for $1 billion. Larger rival Nippon Steel has tied up with Tata Steel for an automotive sheet steel joint venture.
Kobe Steel, strong in automotive high-strength steel sheets, and state-run Steel Authority of India are in the process of setting up a steel plant in India.
Man Industries' larger rival Welspun Corp had earlier struck a deal with private equity fund Apollo Global Management LLC for a $500 million investment.
$1 = 49.9250 Indian rupees Reporting by Swati Pandey in MUMBAI; Editing by Rajesh Pandathil