Mr. Du Shuanghua sheppards the sale of Rizhao Steel
Du Shuanghua, one of China’s wealthiest men, established Rizhao Steel back in 2003.
Rizaho continues to be one of the largest, privately-held steel companies, but in 2009, Shangdong Steel purchased a 67 percent share of Rizhao Steel, and then in 2010, Du Shuanghua sold the remaining 33 percent of his stock to Shangdong Steel.
Nevertheless, Du Shuanghua continues to operate Rizhao Steel under Shangdong Steels governance.
It should be noted that Shangdong Steel is a provincial government-owned company, while Rizhao Steel, under Du Shuanghua, continues to be privately run and held.
The reason for the purchase given, according to Chinese resources, was to streamline its steel sector, which provincial and the Chinese state government held to be far too fragmented.
It should be noted that Du Shuanghua actually viewed the buyout by Shangdong Steel as a hostile takeover. Du Shuanghua tried very hard to stop the merger, even going as far as selling a 30 percent equity share of Rizhao Steel to Hong Kong-based business, Kai Yuan Holdings, a family group owned by relatives of the president of China, Hu Jintao.
The plan was too politically sensitive however to Mr. Jintao and the sale ultimately proceeded.
The sale of Du Shuanghua’s 33 percent share of the company was not part of the original plan for a joint merger, but the state-supported Shangdong ultimately prevailed.
Nevertheless, ultimately Rizhao Steel and Shangdong came to a mutual agreement, and as promised, Shangdong has been relatively hands-off.
As a result, Rizhao steel is now stronger than ever, and the company is among the top 30 firms in China, has over 10,000 employees, and continues to excel and grow in the Chinese Steel Industry.