ArcelorMittal S.A.: ArcelorMittal acquires strategic stake in Vallourec
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Insights
The acquisition of a 28.4% equity interest in Vallourec by ArcelorMittal for €955 million is a significant investment, indicating a strategic move to strengthen its position in the tubular market. The transaction value, at €14.64 per share, suggests a premium on Vallourec's current market valuation, hinting at ArcelorMittal's confidence in Vallourec's growth trajectory and the synergies expected from this deal. Considering Vallourec's reported EBITDA of €1.2 billion on sales of €5.1 billion, the acquisition price seems justified, especially with the anticipated growth in the energy transition sector.
Investors should note that the deal is contingent on regulatory approvals and is expected to close in the latter half of the year. This timeline introduces a degree of uncertainty, as delays or rejections from regulatory bodies could impact the finalization of the deal. Moreover, ArcelorMittal's decision not to launch a tender offer for the remaining shares in the next six months allows them to avoid a full buyout while still gaining significant influence over Vallourec's operations and strategic direction.
Vallourec's focus on low-carbon, integrated production hubs in the US and Brazil, which are key strategic markets for ArcelorMittal, represents a competitive advantage in the current global push for sustainability in steel production. The company's low carbon emissions in its steel-making facilities and its ambitious CO2 intensity reduction roadmap align with increasing regulatory and consumer demands for environmentally responsible practices. This acquisition could therefore enhance ArcelorMittal's environmental credentials and appeal to ESG-focused investors.
Additionally, Vallourec's positioning in the premium tubular solutions market, especially for sectors like energy, automotive and construction, is likely to benefit from the ongoing energy transition. With the company expecting a significant EBITDA contribution from this segment by 2030, this move by ArcelorMittal is well-timed to capitalize on the demand for infrastructure essential for hydrogen, geothermal and carbon capture technologies.
The strategic acquisition highlights ArcelorMittal's commitment to playing a central role in the energy transition, with Vallourec's products being crucial for hydrogen, carbon capture and storage (CCS) and geothermal applications. The demand for such applications is expected to grow, positioning the company to benefit from the burgeoning market for energy transition technologies. Vallourec's comparatively low carbon footprint, coupled with ambitious improvement targets, supports a narrative of sustainable growth in a sector that is increasingly sensitive to carbon emissions.
It is also worth noting the potential for Vallourec to capture a larger share of the energy market as global efforts to transition away from fossil fuels intensify. The expected increase in EBITDA from the energy transition business to 10-15% by 2030 offers a glimpse into the strategic importance of this acquisition for ArcelorMittal, as it diversifies its portfolio in anticipation of future market shifts.
12 March 2024, 22:00 CET
ArcelorMittal (the ‘Company’) today announces that it has signed a Share Purchase Agreement to acquire 65,243,206 shares, representing c.
Having carried out a successful restructuring in recent years, Vallourec presents a compelling opportunity to increase ArcelorMittal’s exposure to the attractive, downstream, value-added tubular market. It is a global leader in premium tubular solutions for energy markets and demanding industrial applications, offering innovative, safe and competitive products for sectors including energy, automotive and construction.
In 2023 Vallourec reported EBITDA of
ArcelorMittal does not intend to launch a tender offer for Vallourec’s remaining shares over the next six months.
Commenting, Aditya Mittal, CEO, ArcelorMittal, said:
“Vallourec is a quality, high added-value tubular business, with established positions of strength in the attractive Brazilian and US markets. As a producer of premium tubular solutions, it has a critical role to play in the energy transition, producing vital products for hydrogen, CCS and geothermal applications, for which demand is expected to grow. It also has a comparatively low carbon footprint with ambitious improvement targets. We look forward to being part of the company’s future.”
Vallourec’s steel making facilities in Brazil and the US have low carbon emissions (North America steel production at 0.290 tCO2 per tonne of steel and Brazil steel production at 0.945 tCO2 per tonne of steel1), with an ambitious roadmap to reduce CO2 intensity (scope 1, 2 and 3 upstream) by
ENDS
About ArcelorMittal
ArcelorMittal is one of the world’s leading integrated steel and mining companies with a presence in 60 countries and primary steelmaking operations in 15 countries. It is the largest steel producer in Europe, among the largest in the Americas, and has a growing presence in Asia, including India, through its joint venture AM/NS India.
ArcelorMittal sells its products to a diverse range of customers including the automotive, engineering, construction and machinery industries, and in 2023 generated revenues of
Our purpose is to produce smarter steels for people and planet. Steels made using innovative processes which use less energy, emit significantly less carbon and reduce costs. Steels that are cleaner, stronger and reusable. Steels for the renewable energy infrastructure that will support societies as they transform through this century. With steel at our core, our inventive people and an entrepreneurial culture at heart, we will support the world in making that change.
ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS). For more information about ArcelorMittal please visit: http://corporate.arcelormittal.com.
| Contact information ArcelorMittal Investor Relations | |
| General | +44 20 7543 1128 |
| Retail | +44 20 3214 2893 |
| SRI | +44 20 3214 2801 |
| Bonds/Credit | +33 171 921 026 investor.relations@arcelormittal.com |
| Contact information ArcelorMittal Corporate Communications | |
| E-mail: Zoe Watt, Teneo | press@arcelormittal.com Zoe.Watt@teneo.com 07713157561. |
1 Scopes 1 and 2 only
FAQ
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