Business Spectator reported that following its rejection of an unsolicited AUD 1 billion takeover offer from POSCO Australia and Noble Group, speculation has grown that steelmaker Arrium Ltd could pursue a long discussed merger with local competitor BlueScop Steel Ltd

BlueScope could emerge as a potential deal partner. Both it and Arrium were spun out of BHP Steel and a merger has been much discussed by investment bankers, analysts and others for several years.

Deutsche Bank analysts said in a note to clients, according to The Australian, “Given Arrium may be in play, this could be the last chance for a potential Arrium/BlueScop merge. We believe the synergies are likely greater for BlueScope and Arrium than for Arrium and the consortium, given the domestic footprint in both steel manufacturing and distribution.”

The bank added that a BlueScope-Arrium deal would also be seen more favourable by the Foreign Investment Review Board and state governments in NSW and South Australia.

Arrium, formerly known as OneSteel, released a statement to the Australian Securities Exchange this week saying the 75 cents per share offer from POSCO and Noble Group undervalued Arrium.

Despite the rejection, POSCO and Noble Group are seen to be interested in a revised bid, while Arrium may draw broader interest now that the company is seen as in play.

Source - .businessspectator.com.au

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