SEOUL, Aug. 14 (Yonhap) -- POSCO, South Korea's No. 1 steelmaker, said Thursday it has inked a deal to spin off its specialty steel affiliate as part of its ongoing effort to concentrate on core businesses and improve its financial standing.
The memorandum of understanding (MOU) signed with SeAH Group, a specialty steel, auto parts and welding materials manufacturer, outlines SeAH Besteel Corp. taking over POSCO Specialty Steel.
POSCO said conditions of the deal and the selling price will be worked out at a later date.
"The move is being taken due to the chronic over-capacity in the specialty steel sector and inroads by imports that warranted some sort of industry-wide restructuring," the steelmaker said.
With the acquisition, SeAH Besteel would be able to push up its annual production capacity to 4 million tons, further consolidating the company's leading status in the country's specialty steel industry.
SeAH said it plans to use the tieup to fuel competitiveness in its upstream and downstream operations, as well as improve the quality of products provided to clients and expand into overseas markets.
POSCO had announced in July that it will sell off three affiliates to streamline operations. It said earlier in the month that it will reorganize and consolidate affiliates to reduce overlap.
The steelmaker said it will sell parts of its holdings in the liquefied natural gas (LNG) terminal in Gwangyang, and offload POSFINE, a company that sells ground blast-furnace slags to cement companies, and POSCO Uruguay S.A.
During consolidation, the management said all steel distribution and machining affiliates that handle materials such as carbon steel, stainless steel and certain plate products will come under the control of POSCO Processing and Steel Co. (POSCO P