New Delhi/Luxembourg, Nov. 30 (Agencies): ArcelorMittal, the world’s largest steel maker, and Japan’s Nippon Steel & Sumitomo Metal Corporation will jointly acquire ThyssenKrupp AG’s US steel mill for $1.55 billion.
The acquirers have formed a joint venture and will finance the deal through equity and debt, ArcelorMittal said in a statement. The plant at Calvert, Alabama, has a capacity of 5.3 million tonnes per annum.
“This is an important strategic acquisition for us. The Calvert plant is the most modern finishing facility in the world. It ideally complements our existing operations in the US and the Americas,” ArcelorMittal chairman and CEO Lakshmi Mittal said in the statement.
The transaction is expected to deliver $60 million of annual synergies and includes a six-year agreement to purchase 2 million tonnes of slab annually from ThyssenKrupp’s Brazilian unit, using a market-based price formula.
The Brazil unit of Germany’s largest steel maker has an option to extend the pact by three years at more favourable terms to the yet-to-be-named joint venture.
ArcelorMittal will be responsible for marketing products on behalf of the joint venture.
“The automotive market is an identified franchise business for ArcelorMittal and the Calvert facility will complement ArcelorMittal’s existing auto business in the US,” the company said.
“This acquisition will also strengthen ArcelorMittal’s position in supplying the Nafta (North American Free Trade Agreement) energy industry, which is expected to demonstrate growing demand for energy pipe and tube products because of increases in oil and natural gas exploration and production,” the statement added.
The transaction is subject to regulatory approvals in certain markets.
ThyssenKrupp has been trying for more than a year and a half to find a buyer for its American unit, which has drained billions from the company for the past few years and been an obstacle to raising fresh funds.
The deal is expected to give a major boost to ThyssenKrupp chief executive Heinrich Hiesinger. He has been trying to shift ThyssenKrupp away from the volatile steel business into higher-margin products and services such as elevators, submarines and factory components.