ArcelorMittal, the world's top steelmaker, and Italian processor Marcegaglia have offered €1.6-billion ($1.72-billion) to buy Italy's troubled Ilva steel plant, outbidding a rival consortium, three sources said on Friday.
The rival group that includes India's JSW Steel bid €1.2-billion for the Ilva plant, the three sources with direct knowledge of the bids told Reuters.
Italy has been seeking a buyer for Ilva, based in the southern Italian port city of Taranto, since the government took over the plant in 2015 in a bid to clean it up and save thousands of jobs in an economically depressed area.
The loss-making plant, Europe's largest by output capacity, was sequestered by magistrates in 2012 on charges its owners caused environmental and health problems in the area.
The plant has production capacity of more than 11-million tonnes of steel a year, but produced just 5.8-million tonnes last year.
The three sources with direct knowledge of the bids said the €1.6-billion offered by ArcelorMittal-Marcegaglia for the Ilva plant was on top of 2.3-billion euros the group pledged last week it would invest to lift output and clean-up the firm.
The sources asked not to be identified as they were not authorised to discuss the offers in public.
Two of the sources said the rival group, known as AcciaItalia, planned to invest €3-billion in Ilva in addition to its €1.2-billion bid for the plant.
AcciaItalia, which includes Italian steelmaker Arvedi, Italy state holding company CDP, businessman Leonardo Del Vecchio's holding company Delfin and JSW, has yet to make its investment plans public.
"ArcelorMittal is pushing quite strongly. They probably also have stronger financial backing because their consortium is just two entities," said Emanuele Norsa, an analyst at market intelligence provider Kallanish Commodities.
Intesa Sanpaolo, Italy’s biggest retail bank, signed a letter of intent to buy Ilva presented by ArcelorMittal-Marcegaglia to the Italian government.
Italian state commissioners managing Ilva have until April 6 to weigh the offers. Two sources said their decision, which is subject to ratification by Italy's Industry Ministry, would be be announced in the second half of April.
But the new owners are unlikely to take over the plant until autumn at the earliest as the ministry has to examine environmental aspects of the bids and European Union anti-trust authorities also needed to approve the deal.
The EU authorities were already reviewing the offers, two of the sources said.
The AcciaItalia consortium is unlikely to face anti-trust issues as JSW, its key industrial player, is a domestic Indian producer with almost no steel assets in Europe.
The ArcelorMittal-Marcegaglia consortium might face hurdles. Global investment bank Jefferies said ArcelorMittal's share in the European flat steel market could rise to 40% from 33% post after acquiring the Ilva plant.