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Chinese firm eyes Norway's solar firm Elkem: sources

HONG KONG (Reuters) - China National BlueStar, a state-run specialty chemicals company backed by U.S. private equity firm Blackstone Group, is in talks to acquire part or all of Norwegian solar silicon product maker Elkem AS, according to three sources familiar with the matter.

An Elkem takeover could cost BlueStar around $1 billion based on the Norwegian company’s financial figures and analysts notes.

Elkem, a unit of Norway’s pizza-to-metals group Orkla ASA, has been in play for several months, as its parent looks to shed non-core assets and focus the overall business.

BlueStar appears to have moved ahead of another suitor, South Korea’s POSCO, whose CEO told Reuters in August that the company was considering a bid for Elkem.

On Sunday, POSCO downplayed the interest, saying the steelmaker is not seriously considering buying Elkem.

It is unclear whether BlueStar is interested in all of Elkem or just certain parts. The sources had direct knowledge of the deal but were unable to be named because the talks are private.

BlueStar, Olka and Elkem were not immediately available for comment. Blackstone declined to comment.

The transaction would mark the Chinese firm’s first major acquisition after Blackstone paid $600 million for a 20 percent stake in the company three years ago.

BlueStar makes chemical material products used in a wide range of sectors from aviation, construction to textile and solar energy.

This deal could also be the first Chinese investment in Norway since the Norwegian Nobel Committee gave the Nobel Peace Prize to jailed Chinese dissident Liu Xiaobo, which chilled relations between Oslo and Beijing.

BlueStar’s parent, state-run ChemChina, is known to the global chemical industry and investors as China’s most market-oriented state-owned enterprise, a savvy deal-maker and a company that hires westerners as senior executives, unusual among Chinese state firms.

A deal with Elkem would boost BlueStar’s presence in the production of renewable energy-related materials.

Olso-based Elkem produces solar-grade silicon, metallurgical silicon, foundry industry alloys, carbon, and microsilica. It also owns or leases 7 hydropower stations.

Orkla Chief Executive Bjoern Wiggen said last month the company aims to reduce its solar exposure within six months to two years, and pare down the conglomerate to focus on its strongest businesses.

ChemChina made its name with a string of acquisitions in 2006 totaling 9.4 billion yuan ($1.41 billion) including Australia’s top plastics maker Qenos, France’s organic silicone producer Rhodia Silicone and animal feed additive firm Adisseo.

It’s acquisition of silicon producer Rhodia led to the establishment of Bluestar Silicone, which makes 600 million euros in revenue, the company’s website said.

($1=6.658 Yuan)

Additional reporting by Denny Thomas in HONG KONG, Quentin Webb in LONDON and Wojciech Moskwa in NORWAY; Editing by Anshuman Daga

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