ArcelorMittal will be responsible for marketing products on behalf of the joint ventureArcelorMittal will be responsible for marketing products on behalf of the joint venture
ArcelorMittal, the world’s largest steel maker, and Japan’s Nippon Steel and Sumitomo Metal Corporation will jointly acquire ThyssenKrupp AG’s U.S. 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 U.S. and the Americas,” ArcelorMittal Chairman and CEO Lakshmi N Mittal said in the statement. The transaction is expected to deliver $60 million of annual synergies and includes a six-year agreement to purchase two million tonnes of slab annually from ThyssenKrupp’s Brazilian unit, using a market-based price formula.
The Brazilian 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 U.S.,” 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 due to increases in oil and natural gas exploration and production,” the statement added.
The transaction is subject to regulatory approvals in certain markets.