Severstal Completes Acquisition of Sparrows Point
05/08/2008 - OAO Severstal completes its acquisition of the Sparrows Point integrated steel mill from ArcelorMittal for US$810 million, net of debt.
OAO Severstal has completed its acquisition of the Sparrows Point integrated steel mill from ArcelorMittal for US$810 million, net of debt.
The sale follows Severstal’s receipt of regulatory approval from the United States Department of Justice and the Committee on Foreign Investment in the United States. ArcelorMittal had been required to sell the facility in order to comply with an anti-trust ruling related to the approval of the 2006 merger of Mittal Steel and Arcelor SA.
Sparrows Point has a capacity of 3.6 million tonnes of crude steel and shipped 2.3 million tonnes of finished steel products in 2007. The facility—the only integrated producer of flat rolled steel on the U.S. East Coast—is a major North American supplier of tin mill products.
Severstal expects the acquisition to be accretive in year-one based on current projections of costs and prices, and believes that the facility offers significant value-creation potential. Severstal also expects substantial synergies with its current U.S. operations in Dearborn, Mich., and Columbus, Miss.
Merrill Lynch & Co. acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel to Severstal.
OAO Severstal is an international metals and mining company with a listing on the Russian Trading System and the London Stock Exchange. Incorporated in 1993, the company focuses on high-value-added and unique niche products and has a successful track record of acquiring and integrating high-quality assets in North America and Europe. Severstal owns mining assets in Russia, thus securing its supplies of raw materials. In 2007, Severstal produced 17.5 million tons of steel. Revenues were $15.2 billion, EBITDA was $3.7 billion, and EPS was $1.92.
ArcelorMittal is the world's largest and most global steel company, with 310,000 employees in more than 60 countries. The company leads a number of major global markets, with leading R&D and technology, as well as sizeable captive supplies of raw materials and strong distribution networks. An industrial presence in 28 European, Asian, African and American countries exposes the company to key steel markets, from emerging to mature, positions it will be looking to develop in the high-growth Chinese and Indian markets. ArcelorMittal’s key financials for 2007 show revenues of USD 105.2 billion, with a crude steel production of 116 million tonnes, representing around 10% of world steel output.
