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BE Group, ArcelorMittal form Joint Venture for Swedish Service Centre Market
01/28/2008 - BE Group AB will acquire 50% of ArcelorMittal SSC AB, as part of BE Group’s and ArcelorMittal’s formation of a joint venture for the service processing and sale of thin sheets on the Swedish market.
BE Group AB is acquiring 50% of ArcelorMittal SSC AB in Karlstad, Sweden, as BE Group and ArcelorMittal establish a joint venture for the service processing and sale of thin sheets on the Swedish market.
BE Group will merge its Borlänge business—cutting and slitting of thin sheets—with ArcelorMittal SSC AB, a wholly-owned subsidiary of Arcelor Mittal and the third-largest player on the Swedish market, with reported sales of about SEK 400M during 2006.
The ambitions with the joint venture company include growth in the Swedish thin sheet market, improved service to customers and increased value creation, increased effectiveness within a larger structure, and strengthened and stabilized long-term profitability.
“The market for cutting (to length) and slitting of thin sheets in Sweden is large and important for BE Group on a long-term basis,” said BE Group President and CEO Håkan Jeppsson. “By merging our business in Borlänge with ArcelorMittal’s in Karlstad, an important step is taken on a market that needs to be consolidated.
“We are very pleased and proud to be part of this kind of transaction with the world’s largest steel producer,” continued Jeppsson. “With ArcelorMittal we get a very strong partner, which will guarantee quality products, technical skills, and secured supply of raw material.”
BE Group will pay the purchase-sum by transferring its thin sheet business in Borlänge through a non-cash issue and by a cash payment of SEK 15M. The ownership in the new company will be accounted as an associated company in BE Group’s books. By spinning off the existing business, BE Group will generate capital gains amounting to approximately SEK 50M. The final amount is based on the balance sheet at the time of the takeover.
The transaction is subject to compliance with the Competition Authorities. The parties anticipate that the joint venture company shall commence its business during the first quarter of 2008.
BE Group is one of the leading trading and service companies within steel and other metals in Europe. The company has about 10,000 customers, primarily within the construction and engineering industries. BE Group provides service in the steel, stainless steel and aluminum sectors. The company's sales in 2006 were SEK 6.7 billion. BE Group has approximately 950 employees in ten countries in northern Europe, where Sweden and Finland are its largest markets. The head office is situated in Malmö.
