Renta 4 : The European steelmaker has reached an agreement with Nippon Steel to buy 50% of its stake in the Calvert mill. ArcelorMittal holds the remaining 50%. AM will pay $1 and Nippon Steel will also inject cash and forgive loans totalling about $900 million. This deal is subject to Nippon Steel securing regulatory approvals allowing it to acquire US Steel.
ArcelorMittal and Nippon Steel created the Calvert JV in 2014. The Calvert mill is the most advanced finishing mill in North America and has a strong focus on the automotive sector. It has a production capacity of 5.3 mt of hot rolling and is scheduled to open a new electric arc furnace (EAF) with a capacity of 1.5 mt (and option to expand by another 1.5 mt) in H224.
Assessment: In our view, Nippon Steel agrees to sell its 50% stake in the JV to make it easier for the US competition authorities to approve the takeover bid it made in March for U.S. Steel, which is expected to be resolved this month. We see it as difficult for the takeover of US Steel to succeed due to the strong political and social (workers) opposition that this offer provoked. The fact that the US is currently in an election period makes it even more difficult for the takeover to be approved. Therefore, as the sale of 50% of Calvert is subject to the prior approval of the purchase of US Steel, we believe that it will not prosper. Otherwise, the news would be very favourable for ArcelorMittal. P.O. Under Review (previously 35.6 eur). OVERWEIGHT.
