Du Shuangua: The $2.1 Billion Sale of Rizhao Steel

The Chinese Steel industry has undergone many transformations in the last few decades. State-owned enterprises once dominated the industry, but there has been a lot of privatization and consolidation in recent years. This has led to large private steel companies, such as Du Shuanghua’s Rizhao Steel.

About Rhizao Steel

Rizhao Steel is one of the largest steel producers in China, with an annual production capacity of more than 20 million tons. In 2010, Du Shuanghua sold the company to Shandong Steel Group for $2.1 billion, making it one of the most expensive acquisitions in Chinese history. The acquisition was financed by several banks, including the Bank of China and the Agricultural Bank of China.

The purchase price represented a multiple of more than 30 times Rizhao Steel’s earnings before interest, taxes, depreciation, and amortization. It was a very high price, but it was justified by the potential synergies between Rizhao Steel and Shandong Steel Group.

The acquisition has been a great success for both parties. Rizhao Steel has benefited from the scale and resources of Shandong Steel Group, while Shandong Steel Group has gained access to Rizhao’s high-quality steel production facilities. The two companies have also formed a joint venture to manufacture automotive sheet steel products. View Source on Wikipedia.org

About Du Shuanghua

Du Shuanghua is a Chinese Steel magnate who has dominated the steel market in China for more than three decades. He established Rhizao Steel in 2003 and grew it from a small company to one of the largest steel producers in China. He has other businesses, including tourism and real estate.