Bloomberg News

Novolipetsk May Buy Stakes in Duferco Steel Plants

October 18, 2006

OAO Novolipetsk Steel said it's in talks to acquire stakes in plants held by Switzerland's Duferco Participations Holding Ltd., which would give Russia's fourth- biggest steelmaker a presence in western Europe and the U.S.

Novolipetsk may create a joint venture that will buy Duferco Farrell Corp. in the U.S. and plants in Belgium, France and Italy, the Lipetsk, Russia-based company said today in a Regulatory News Service statement. An agreement is expected by the end of the year, it added.

``They wanted rolling facilities and to move into other markets, so this deal won't come as a surprise'' Kyrill Chuiko, a metals analyst at UralSib Financial Corp. in Moscow, said in a telephone interview.

Russian steel producers make an excess of slab, a flat semi- processed steel that needs to be rolled before it can be sold at a higher profit to customers such as carmakers. Evraz Group SA, Russia's biggest steelmaker by volume, said Oct 16 it wants to buy rolling capacity in Europe or the U.S.

Shares of Novolipetsk rose 30 cents, or 1.5 percent, to $20.65 at 11:50 a.m. in London, valuing the company at $12.4 billion. Novolipetsk raised $609 million on Dec. 9 in a London share sale.

Novolipetsk paid $104 million for Danish mill DanSteel AS in January. It failed to win a tender for Turkey's biggest steelmaker, Eregli Demir & Celik, in October 2005.

European Assets

Novolipetsk may buy Duferco's Carsid SA, Duferco Clabecq SA and Duferco La Louviere SA in Belgium, Duferco Coating SAS, Sorrel SA and Duferco Transformation Europe in France and Acciaierie Grigoli SpA in Italy.

All the assets except Duferco Transformation are steel- producing, John Simmons, a London-based Novolipetsk spokesman, said in a telephone interview.

Closely held Duferco expanded to acquire production plants in the 1990s after starting as a trader of Brazillian steel in 1979. The company's founder and chief executive, Bruno Bolfo, is a non- executive director on the board of Evraz.

To contact the reporters on this story: Samantha Shields in Moscow at sshields2@bloomberg.net

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net


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