TURKEY - Turkish armed forces pension fund OYAK made the highest bid for a 46.12% stake in the country's biggest steel company, Erdemir.

The fund, which provides supplementary retirement benefits and whose members include 200,000 serving officers and 25,000 pensioners, bid $2.77bn (€2.32bn) for the stake.

Among the other bidders in a televised auction were Netherlands-based Mittal, the world's top steelmaker, and Luxembourg-based Arcelor, the second largest. Erdemir is a key asset in the government's ambitious privatisation programme. After the auction both said the OYAK price was too high.

The local competition and privatisation authorities must approve the OYAK bid before the sale can be finalised.

Under the bidding conditions, the winner is obliged to also buy a 3.17% share held by the Development Bank of Turkey, a public bank.

If the sale is approved, OYAK would have the option of paying the total price at once, or paying 50% immediately and the remainder in equal instalments over two years at a 7% interest rate.

The privatisation is opposed by Erdemir employees who held a demonstration in central Ankara to coincide with the auction. The auction marked the fourth attempt to sell the enterprise since 1994, the previous tenders having been scrapped.

OYAK has equity investments in 29 companies – mostly in the automotive, cement, financial and service sectors – and often through joint ventures with international players like Renault and AXA.

Local press reports suggest that Arcelor would have priority in possible partnership talks with OYAK, as the two already have business ties, with Arcelor supplying steel to an OYAK joint venture with Renault.

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