Bloomberg News

Arcelor, Nippon Steel Said to Team Up for Thyssen Unit

January 29, 2013

ArcelorMittal and Nippon Steel & Sumitomo Metal Corp. (5401), the world’s two biggest steelmakers, teamed up to bid for ThyssenKrupp AG (TKA)’s U.S. plant, according to people familiar with the talks.

ArcelorMittal and Nippon Steel made a non-binding offer of about $1.5 billion for the Alabama plant, the people said. The two companies face competition from rivals including Cia. Siderurgica Nacional SA (SID:US), a Brazilian steelmaker bidding for ThyssenKrupp plants in the U.S. and Brazil, as well as Nucor Corp. (NUE:US), which is interested in the U.S. site, said the people, who asked not to be identified because the talks are private.

The U.S. and Brazilian operations may fetch between $3 billion and $5 billion, one of them said. Binding offers are due mid-February, so the prices may change, the people said.

ThyssenKrupp rose more than 2.9 percent, the most in almost three weeks, to close at 18 euros in Frankfurt.

ThyssenKrupp Chief Executive Officer Heinrich Hiesinger is selling the Steel Americas plants as waning demand from the auto and construction industries and competition from China weakens prices and squeezes profit margins. The company, based in Essen, Germany, last month canceled its dividend after posting a second-straight annual loss following a 3.6 billion-euro ($4.9 billion) writedown on the Americas unit.

The two companies are jointly bidding to split the costs and give the Japanese company access to ArcelorMittal (MT)’s existing rolling-steel slabs in Latin America, they said.

Representatives of CSN in Sao Paulo and of Nippon Steel declined to comment on the process, as did an ArcelorMittal official based in London. A ThyssenKrupp spokesman in Essen declined to comment on details such as concrete timetables, names or figures. A representative of Nucor was not immediately available for comment.

‘On Track’

Hiesinger said last month that the sale of Steel Americas is “fully on track” to be completed before the end of the current fiscal year. Chief Financial Officer Guido Kerkhoff said at the time there are more than five bidders interested in one or both of the plants in Alabama and the state of Rio de Janeiro. The Alabama plant rolls steel slabs into high-grade sheets for carmakers in the U.S.

ThyssenKrupp initially received indicative offers from ArcelorMittal, Posco (005490), Nippon Steel, JFE Holdings Inc. (5411), Nucor, U.S. Steel Corp. (X:US), CSN and Ternium SA (TX:US) for the plants, people familiar with the matter said in October.

Steel Americas’ adjusted loss before interest and tax was 1.01 billion euros in the year ending September 30 as production costs outstripped expectations amid sluggish steel prices.

To contact the reporters on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net; Tino Andresen in Dusseldorf at tandresen1@bloomberg.net

To contact the editors responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net; John Viljoen at jviljoen@bloomberg.net


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Companies Mentioned

  • SID
    (Cia Siderurgica Nacional SA)
    • $4.97 USD
    • 0.03
    • 0.6%
  • NUE
    (Nucor Corp)
    • $50.22 USD
    • -1.02
    • -2.03%
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