Shadong Iron and Steel Group will take over Rizhao Iron and Steel Group and purchase a 67 percent stake in the company while Du Shuanghua, the founder of Rizhao Steel, will hold a 33 percent stake, according to media reports.

Thirty percent of Rizhao's core assets to Kai Yuan Holdings, a Hong Kong-listed company, have not been finalized.

The acquisition is part of a plan by the Shandong provincial government to build a large steel group.

When most Chinese State-owned steel companies suffered heavy losses, Rizhao reported a net profit of about 1.8 billion yuan in the first half of 2009, while Shandong Steel reported a loss of 1.3 billion yuan.

Editor Li Jing

By Ji Yuan (China Daily Shandong Bureau)