Nikkei: ArcelorMittal, Nippon Steel To Buy ThyssenKrupp's US Plant For $1.97 Bln

(RTTNews) - Steel giant ArcelorMittal SA (MT) and Japan's Nippon Steel & Sumitomo Metal Corp. have teamed up to buy German steel giant ThyssenKrupp AG's (TYEKF) U.S. steel-rolling mill in Alabama for about 200 billion yen or $1.97 billion, according to a report in Japanese newspaper Nikkei's online edition on Tuesday.

Both the acquiring companies are said to be splitting the purchase cost evenly between them, with the deal being Nippon Steel's largest ever outside Japan.

The deal is expected to be announced by the companies in early December. The other terms and conditions of the deal are not yet known. The deal may also include a long term slab supply contract for ThyssenKrupp's Brazilian steel mill in order to help it secure value by improving its utilization.

ArcelorMittal and Nippon Steel were recently in exclusive talks with ThyssenKrupp in order to strike a deal. ThyssenKrupp also went to the extend of postponing the release of its annual results by about ten days due to exclusive talks on the potential sale of the Alabama plant. The fiscal 2013 results were postponed to December 2 from November 21.

ArcelorMittal, the world's largest steelmaker by volume, is said to have termed the Alabama pant as a 'world-class asset in terms of quality and capability.' The company has always hunted for the acquisition of beleaguered steel makers to built its empire.

ArcelorMittal has been pursuing the deal since mid-January as a leading contender, but was looking for a joint-venture partner to acquire the plant in order to alleviate antitrust concerns as it already holds a 37 percent market share in the North American Free Trade Area.

Nippon Steel & Sumitomo Metal Corp., world's second largest steel firm, is a newly formed entity created by the merger of Japan's largest steelmaker Nippon Steel Corp. and Sumitomo Metal Corp. in October 2012.

The Alabama steel plant has an output capacity of about 2.2 million tons a year, and supplies automotive and construction steel. The proposed deal to acquire the state-of-the-art facility will double the combined production capacity of Nippon Steel and ArcelorMittal in the U.S. to 4.2 million tons.

The deal will also guarantee Japanese automakers a stable supply as they ramp up vehicle production in the U.S.

For more than a year, the company has made unsuccessful attempts to sell its loss-making Steel Americas business, comprising a steel slab plant in Brazil and the steel-rolling mill in Alabama.

ThyssenKrupp has already recorded losses of more than $15.7 billion on the plants. ThyssenKrupp reportedly acquired the two plants in Alabama and Brazil with a total investment of $11.8 billion in order to crack the American market. It put the plants on the block in the first half of last year.

According to a new plan, ThyssenKrupp, Germany's largest steelmaker by output, is currently in the process of completely exiting its American steel operations (ThyssenKrupp Steel USA), and expanding its operations in Brazil (ThyssenKrupp CSA).

It now plans to completely sell its unprofitable American steel operations and maintain its 73 percent stake in the steel plant in Brazil, while also building a steel processing plant in Brazil by teaming up with a partner. Brazilian mining company Vale SA (VALE) holds the remaining 27 percent stake.

TYEKF closed Tuesday's regular trading session at $25.80, up $0.39 or 1.53% on a volume of 300 shares, while MT closed at $16.68, down $0.06 or 0.36% on a volume of 3.17 million shares.