Luxembourg, Friday 29 November 2013 – ArcelorMittal today announces that it has entered into a 50/50 joint venture partnership with Nippon Steel & Sumitomo Metal Corporation (“NSSMC”) to acquire 100% of ThyssenKrupp Steel USA (“TK Steel USA”) from ThyssenKrupp for an agreed price of US$1,550 million.TK Steel USA is a steel processing plant situated in Calvert, Alabama, with a total capacity of 5.3 million tonnes including hot rolling, cold rolling, coating and finishing lines.
The transaction – which is expected to deliver US$60 million of annual synergies – will be financed through a combination of equity and debt at the joint venture level.
The transaction includes a six-year agreement to purchase two million tonnes of slab annually from TK CSA, an integrated steel mill complex located in Rio de Janeiro, Brazil, using a market-based price formula. TK CSA has an option to extend the agreement for an additional three years at more favourable terms to the JV, compared with the initial time period.
The remaining slab balance will be sourced from ArcelorMittal plants in the US, Brazil and Mexico. ArcelorMittal will be responsible for marketing the product on behalf of the JV. The price ArcelorMittal will receive for its slabs will be determined by the volume, price and cost performance of the JV.
The automotive market is an identified franchise business for ArcelorMittal and the Calvert facility will complement ArcelorMittal’s existing auto business in the United States. The company’s current facilities for the auto segment in the US are at high levels of capacity utilisation and the NAFTA automotive market is expected to show an increase in vehicle production of approximately 15% over the next decade.
This acquisition will also strengthen ArcelorMittal’s position in supplying the NAFTA energy industry, which is expected to demonstrate growing demand for energy pipe & tube products due to increases in oil and natural gas exploration and production.
ArcelorMittal and NSSMC have a proven track record of successful collaboration for the auto industry in North America through the I/N Tek and Kote joint ventures, which were established in 1987 and are located in New Carlisle, Indiana.
Commenting, Mr Lakshmi N. Mittal, chairman and CEO of ArcelorMittal, said: “This is an important strategic acquisition for ArcelorMittal. The Calvert plant is the most modern finishing facility in the world. It ideally complements our existing operations in the United States and the Americas, and will improve our ability to supply customers in the automotive and other markets in the Southern United States, where we do not have comparable facilities today. We have worked successfully with NSSMC in other joint ventures in the US for years and look forward to extending the collaboration.”
The transaction is subject to regulatory approvals in certain markets.