ArcelorMit­tal sells as­sets to Lib­erty House

As­sets likely to sell for less than $1bn book value: Jef­feries; still in talks to sell as­sets in Lux­em­bourg and Bel­gium; deal would dou­ble Lib­erty House ca­pac­ity to 15mn tonnes

Gulf Times Business - - FRONT PAGE -

ArcelorMit­tal, the world’s largest steel pro­ducer, has agreed the sale of plants in the Czech Repub­lic, Ro­ma­nia, Mace­do­nia and Italy to Lib­erty House to sat­isfy reg­u­la­tory re­quire­ments for its ac­qui­si­tion of Ital­ian steel­maker Ilva.

The an­nounce­ment by ArcelorMit­tal yes­ter­day did not dis­close the value of the dis­pos­als, though in­vest­ment bank Jef­feries said they are un­likely to achieve a book value it es­ti­mates at $1bn.

The sales sat­isfy part of an agree­ment with the Euro­pean Com­mis­sion, which ap­proved the ac­qui­si­tion of Ilva — Italy’s largest steel plant by ca­pac­ity — af­ter ArcelorMit­tal pledged to sell a string of busi­nesses across Europe to ad­dress com­pe­ti­tion con­cerns.

ArcelorMit­tal said talks were on­go­ing for the sale of ArcelorMit­tal Dude­lange in Lux­em­bourg and sev­eral fin­ish­ing lines in Liege, Bel­gium, which were the other as­sets in­cluded in the agree­ment with the Euro­pean Com­mis­sion.

“Given a poor re­cent earn­ings track record, all dis­posal as­sets (in­clud­ing Dude­lange and Liege) would be worth circa $750mn to $950mn on a peer-based EV/EBITDA ba­sis,” said Jef­feries in a note that re­it­er­ated its ‘ buy’ rat­ing on the stock.

“While there re­mains a wide range of ex­pec­ta­tions for dis­posal pro­ceeds, this is sure to sur­pass the 180mn eu­ros per an­num that ArcelorMit­tal is pay­ing the Ital­ian state to ac­quire Ilva.”

ArcelorMit­tal signed a pre­lim­i­nary agree­ment to pay €1.8bn over 10 years for Ilva.

It also promised to in­vest €1.2bn to boost pro­duc­tiv­ity and 1.1bn eu­ros to re­duce pol­lu­tion.

Ger­man steel­maker Salzgit­ter said it has sub­mit­ted an of­fer for ArcelorMit­tal as­sets, while there is talk in the mar­ket that Rus­sian steel­maker NLMK is also in the run­ning.

ArcelorMit­tal said the clos­ing of the deal with Lib­erty House, one of the world’s largest pri­vately owned in­dus­trial groups with op­er­a­tions cov­er­ing more than 30 coun­tries, is sub­ject to com­ple­tion of the Ilva ac­qui­si­tion.

Lib­erty House, which has been snap­ping up distressed steel and alu­minium as­sets, said the deal more than dou­bles its world­wide steel-rolling ca­pac­ity to 15mn tonnes.

Jef­feries said the sale to Lib­erty re­duces mar­ket con­cerns that the ArcelorMit­tal fur­naces would fall piece­meal into the hands of sev­eral smaller play­ers, which could weigh on steel prices by in­creas­ing the num­ber of com­peti­tors in the mar­ket.

“The sale to Lib­erty as­suages fears that these as­sets could be ac­quired by po­ten­tially more dis­rup­tive Ukrainian/Rus­sian peers, as pre­vi­ously ru­moured,” it said.

ArcelorMit­tal had been due to take con­trol of Ilva on July 1, but the deal met with re­sis­tance from Italy’s new govern­ment, which ques­tioned its va­lid­ity.

In Septem­ber, how­ever, the com­pany reached agree­ment with trade unions, prompt­ing Deputy Prime Min­is­ter Luigi Di Maio to say he would no longer op­pose the takeover.

An em­ployee over­looks as sheets of steel are pre­pared for press­ing at the ArcelorMit­tal re­search and devel­op­ment cen­tre in Mon­tataire, France. ArcelorMit­tal said talks were on­go­ing for the sale of ArcelorMit­tal Dude­lange in Lux­em­bourg and sev­eral fin­ish­ing lines in Liege, Bel­gium, which were the other as­sets in­cluded in the sale agree­ment with the Euro­pean Com­mis­sion.

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