MOU signed in ThyssenKrupp/Tata Steel merger

The first step has been taken towards merging Tata Steel and Thyssenkrupp, in a move which would create Europe’s second-largest steel group, according to BBC News.

The two companies have been discussing a merger since 2016, when Indian-owned Tata changed plans to sell off its UK sites. A Memorandum of Understanding has been signed which proposes a joint venture on equal terms.

The merger would result in annual savings of up to ?€600m (£533m) and the loss of around 4,000 jobs, with an equal split between administration and production shared across both companies.

Following the merger, the new entity would be headquartered in the Netherlands and would ship around 21 million tonnes of flat steel products each year, second only to ArcelorMittal. The joint venture’s annual turnover would be around ?€15bn with a workforce of 48,000 across 34 locations.

Tata Steel chairman Natarajan Chandrasekaran said: “The strategic logic of the proposed joint venture in Europe is based on very strong fundamentals and I am confident that Thyssenkrupp Tata Steel will have a great future.”

Following the announcement shares in Tata Steel rose 1% while Thyssenkrupp jumped 5%.

 

Steel giant ArcelorMittal favourite to acquire ThyssenKrupps Alabama plant

Luxembourg-based steel and mining group ArcelorMittal (AMS:MT) is one of the two top bidders for German steelmaker ThyssenKrupp AG’s (ETR:TKA) steel business in the Americas, offering USD1.5bn (EUR1.1bn) for the company’s Alabama plant, according to a report by the Wall Street Journal.

Companhia Siderurgica Nacional (NYSE:SID), or CSN, is the other leading competitor with an offer of USD3.8bn for the Alabama plant and a stake in ThyssenKrupp’s mill in Brazil, but sources cited by the paper said CSN has less balance sheet flexibility and lacks supply of high-quality slabs and that limits the chances of its bid.

ThyssenKrupp expects binding offers by mid-February, with a decision regarding a buyer to be made this fiscal year to end September 2013. The Americas operations were offered for sale in 2012, with their parent targeting a price equal to their book value of USD8.86bn, it has said.

ArcelorMittal confirmed last week it had made an offer for the Alabama plant, which its CFO Aditya Mittal described as a world-class quality asset, the Wall Street Journal said. The Luxembourg steel group also said last week it had raised USD4bn from issuing stock and bonds.

This plant has some 1,500 employees, while the one in Brazil employs 3,500.

The German group announced last year plans to sell these operations or seeking partnerships with the view of putting an end to losses at the mills and focusing on its business in Europe.
It had also received offers from other suitors, but these are not seen as strong rivals to ArcelorMittal and CSN due to their weaker financial position, the Wall Street Journal said.

US steel group Nucor to acquire ArcelorMittal unit for $605m

US steel and steel products manufacturer Nucor Corporation (NYSE:NUE) said that it had agreed a deal for Skyline Steel LLC, a subsidiary of Luxembourg-based sector player ArcelorMittal (AMS:MT).

Nucor will acquire the business and its affiliates for a total consideration of about USD605m (EUR477m).  Skyline Steel will become a wholly owned Nucor subsidiary, continuing to operate from its base in Parsippany, New Jersey. It will remain the exclusive North American and Caribbean distributor of ArcelorMittal’s piling and foundation products.

The transaction is expected to close as soon as the parties obtain the necessary regulatory approvals and all closing conditions are met. Nucor expects the deal to deliver substantial synergies and enhance its financial results in the next fiscal year.

Skyline Steel is a major steel foundation distributor for customers operating in the US, Canada, Mexico and the Caribbean. Its products are used in the most challenging construction and infrastructure segments such as marine construction, bridge and highway construction, heavy civil construction, storm protection, underground commercial parking and environment containment.

Nucor chairman and chief executive Daniel R. DiMicco stated that his company was thrilled to be acquiring a business that had been its trusted piling products distribution partner for more than 20 years.

Thanks to its robust distribution network, top-quality customer service and excellent technical support, Skyline Steel is in a good position to expand further its North American piling and foundation products business, DiMicco said.