Steel giant ArcelorMittal SA (MT: Quote) agreed Thursday to sell Skyline Steel LCC and Astralloy Steel Products, Inc. in the NAFTA Region to Nucor Corp. (NUE) for about $605 million. The deal, which is part of ArcelorMittal's stated strategy of selective divestment of non-core assets, is expected close by the end of the second quarter of 2012.
"Skyline Steel and Astralloy are strong specialist businesses with excellent prospects in their markets. However, this decision is very much in line with our strategy of focusing on core assets and reducing net debt," ArcelorMittal CFO Aditya Mittal said in a statement.
Meanwhile, ArcelorMittal will then continue to own and operate the foundation distribution businesses in the rest of the world.
Skyline Steel LLC is a premier steel foundation distributor serving the US, Canada, Mexico and the Caribbean and is a wholly-owned subsidiary of ArcelorMittal. Skyline's flagship products include hot rolled and cold formed sheet piles, H-piles and pipe piling. Skyline Steel generated revenues of $873 million in 2011.
Astralloy Steel Products has been the industry leader in providing an entire spectrum of abrasion resistant and specialty steel plate and bar.
Nucor noted that Skyline Steel will be a wholly-owned subsidiary of Nucor and will maintain its headquarters in Parsippany, New Jersey.
Skyline Steel has been a distributor of Nucor's piling products for more than two decades, its largest supplier, and ArcelorMittal said Nucor was a "natural buyer for this subsidiary business."
The deal will also see Skyline retain exclusive rights to distribute ArcelorMittal's piling and foundation products, including sheet piling and wear resistant products , in North America and the Caribbean.
Nucor said it expect to realize meaningful synergies from the acquisition and expect the deal to be accretive in the next full fiscal year of ownership.
ArcelorMittal is currently in the process of divesting a significant portion of its $10 billion in minority investments and joint ventures in order to reduce net debt and protect its investment grade credit rating.
Net debt stood at $23.6 billion at the end of the first quarter. The company earlier said it expects net debt to fall below $22.5 billion by the end of June.
Earlier in the month, ArcelorMittal divested its 23.48 percent stake in energy firm Enovos International SA, a Luxembourg-based Northern Europe energy distributor, to a fund managed by private equity firm AXA Private Equity for 330 million euros in line with its strategy of selective divestment of non-core assets.
MT closed Thursday's regular trading session at $14.23, down $0.34 or 2.33% on a volume of 8.04 million shares, and NUE closed at $34.79, down $0.28 or 0.80% on a volume of 3.18 million shares.
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by RTT Staff Writer
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