The takeover battle over Hong Kong-listed steelmaker China Oriental Group that lasted for a few months has left everyone a winner; shareholders have seen the stock skyrocket and ArcelorMittal, the world's largest steelmaker, has gained a foothold in the mainland's fast-growing steel market. The battle was sparked by 'Iron Princess' Diana Chen Ningning, then China Oriental's second-largest shareholder, when she offered HK$6.33 billion or HK$3 a share in cash and bonds for the 72 per cent stake she did not own in a hostile takeover bid on June 18. She cited her dissatisfaction with the company's largest shareholder and chairman Han Jingyuan's management. That bid descended into a bitter tit-for-tat legal battle between the two veteran entrepreneurs and once close allies and succeeded in attracting attention from fund houses, mainland rivals and global giant ArcelorMittal. Following the long-running feud between Mr Han and Ms Chen, ArcelorMittal approached Mr Han, who has a 45 per cent stake in China Oriental, about possible co-operation. As a result, ArcelorMittal has bought Ms Chen's 28 per cent share and through options eventually could increase its stake in the company to 73 per cent from Mr Han's hands. Stocks, based on the closing price of HK$6.40 on Friday, have surged 181 per cent from HK$2.28 since Ms Chen first publicly broached the subject of buying a controlling stake in China Oriental on February 15 or 106 per cent since she formally announced her first offer in June. The gain in the share price may continue with some brokerages such as JP Morgan raising its price target for China Oriental to HK$8 a share. This is despite ArcelorMittal's plan to boost its stake still being subject to antitrust clearance by the Ministry of Commerce and the State Administration for Industry and Commerce. 'China Oriental has been trading at a large discount to domestic and global peers. With ArcelorMittal taking the controlling stake, the discount should disappear,' Zhang Feng, analyst at JP Morgan, said. JP Morgan's price target of HK$8 on China Oriental, implying 11.6 times next year's forecast earnings, is on par with global steel companies' average and means the stock still has a 25 per cent upside potential. Helen Lau, analyst at Daiwa Securities, believes China Oriental's fundamentals will get a strong boost from the backing of ArcelorMittal in the areas of technology upgrades, further capacity expansion and cheaper raw-material procurement. China Oriental would also benefit from the world-class management, operational experience and global merger and acquisition expertise of ArcelorMittal over the long term and could expand into one of the largest H-beam producers in the mainland, Ms Lau added. Ms Chen, while failing to wrest control of the company from Mr Han, reaped a profit of about HK$4.9 billion in five years from the disposal of China Oriental shares. It is not a bad deal as it boosts her war chest for expansion in her steel empire Pioneer Iron & Steel Group, which is planning a listing. Ms Chen, the flashy granddaughter of Lu Dong, metallurgy minister in the 1960s and 1970s, acquired the shares by swapping her stake in Hebei Jinxi Iron & Steel, the mainland's 29th largest steelmaker with an annual capacity of 4.3 million tonnes, before China Oriental went public in 2004. She bought Jinxi Steel's stake for 103 million yuan in December 2002 and July 2003 when she also offered financial aid to Mr Han for him to complete the management buyout of Jinxi Steel from the local government. It remains unclear why Mr Han agreed to sell his stake to ArcelorMittal, but it may be because ArcelorMittal helped to expel Ms Chen. Mr Han's official reason is that the introduction of ArcelorMittal would help to develop the company into the largest H-beam producer on the mainland. ArcelorMittal has been trying for years to obtain a foothold in the mainland's steel market and has been frustrated trying to gain control over larger state-owned mainland steelmakers. The smaller and privately-owned China Oriental could provide a ticket into the market, analysts said. ArcelorMittal could use China Oriental as a platform to buy more assets, building up exposure in the mainland and replicating this model to expand quickly in the country by acquiring privately-owned steel mills if the deal gets approval, analysts said. Beijing bans foreign companies from taking majority stakes in the nation's leading state-owned steel mills but does not have clear rules on overseas investment in non-state steelmakers. ArcelorMittal's major investments on the mainland include a 29 per cent stake in Shenzhen-listed Hunan Valin Steel Tube and Wire, and a 12 per cent stake in a Shanghai-based venture with Nippon Steel Corp and Baoshan Iron & Steel.