The committee of creditors of debt-laden Essar Steel India Ltd has chosen ArcelorMittal SA and Japan's Nippon Steel & Sumitomo Metal Corp as the winning bidders for the asset, Nippon Steel said in a statement on Friday.
The two companies would pay a total of $5.7 billion to buy Essar Steel, a Nippon Steel spokesman said. ArcelorMittal would own a majority stake, and Nippon Steel would own a nearly equal stake, he added.
"The acquisition will be implemented subject to the approvals of Indian National Company Law Tribunal and other relevant authorities," the Nippon Steel statement said.
The announcement potentially brings to a close a year-long tussle for one of the most attractive assets under the new insolvency process in India.
Essar Steel drew interest from Indian steelmakers such as JSW Steel and Vedanta Ltd and international companies and banks such as Russia's VTB and ArcelorMittal.
The news comes just a day after founders of Essar Steel came in with a surprise offer to pay 543.89 billion rupees ($7.4 billion) to creditors to settle claims and allow the company to exit the bankruptcy process.
Essar's founders - the Ruia family - have tried to hold on to the steel asset, first through a minority stake in VTB-led consortium Numetal which bid for Essar Steel, and later as a last-ditch effort on Thursday through an independent offer.
The tussle between Numetal and ArcelorMittal went all the way to India's Supreme Court, which this month ruled that any bidders would have to settle all pending dues tied to any distressed assets they were associated with before they could bid for the steel plant.
ArcelorMittal announced last week that it had cleared the dues of Uttam Galva and KSS Petron, two other smaller defaulters that it was previously associated with, paving the way for it to acquire the Essar Steel asset.
"We expect the process to continue as per the clear terms of the IBC," ArcelorMittal said on Thursday, referencing the new Indian Bankruptcy Code.
Essar Steel, a 10 million tonne steel plant in the western state of Gujarat, was among a dozen of India's biggest debt defaulters that were pushed to bankruptcy court last year by a central bank order aimed at clearing a $147 billion mountain of bad loans.
Banks and other creditors and suppliers have staked claims of 507.78 billion rupees ($7.9 billion) from Essar Steel, according to Indian government data.
ArcelorMittal and Essar Steel did not immediately respond to a request for comment from Reuters.
($1 = 73.2200 Indian rupees)