Nippon Steel agrees to sell its interest in Calvert to ArcelorMittal, at the request of NSC pursuant to its agreed acquisition of US Steel

Rhea-AI Summary

ArcelorMittal (MT) has announced a definitive Equity Purchase Agreement with Nippon Steel (NSC) to acquire NSC's 50% stake in the AM/NS Calvert Joint Venture. This transaction, requested by NSC to address regulatory concerns related to its pending acquisition of US Steel, is contingent on NSC completing the US Steel deal. ArcelorMittal will pay $1 for the transaction, while NSC will inject cash and forgive partner loans totaling approximately $0.9 billion.

AM/NS Calvert, acquired in 2014, is North America's most advanced finishing facility, supplying high-quality steel to demanding customers. It features a state-of-the-art hot strip mill, continuous pickling line, coating lines, and a new 1.5mtpa electric arc furnace under construction. The facility plays a important role in supplying domestic manufacturing industries and is considering further investments to enhance its capabilities.

Positive

• Acquisition of NSC's 50% stake in AM/NS Calvert for only $1
• NSC to inject cash and forgive partner loans worth approximately $0.9 billion
• Full ownership of North America's most advanced steel finishing facility
• Potential for increased market share in automotive and other demanding industries
• Ongoing investments in EAF and potential for additional capacity expansions

Negative

• Transaction contingent on NSC's acquisition of US Steel, which faces regulatory hurdles
• Potential integration challenges and costs associated with full ownership
• Increased exposure to North American market volatility

Insights

Financial Analyst

This transaction marks a significant shift in ArcelorMittal's strategic position in North America. By acquiring NSC's 50% stake in AM/NS Calvert for a nominal $1, plus an estimated $0.9 billion in cash injection and loan forgiveness from NSC, ArcelorMittal gains full control of a critical asset. The Calvert facility is North America's most advanced steel finishing plant, important for supplying high-quality steel to demanding sectors like automotive. This move strengthens ArcelorMittal's vertical integration and market position in the U.S., potentially boosting profitability and competitive edge. The deal's structure, contingent on NSC's acquisition of US Steel, also demonstrates ArcelorMittal's opportunistic approach to expansion. Investors should note the potential for increased revenues and market share, balanced against the need for capital investment to fully leverage this asset.

Industry Analyst

This deal represents a significant reshaping of the North American steel landscape. ArcelorMittal's full ownership of AM/NS Calvert positions it to better compete with integrated U.S. steelmakers. The facility's capabilities in advanced high-strength steels and automotive grades are particularly valuable as the industry moves towards lighter, stronger materials. The ongoing 1.5 billion EAF project at Calvert, coupled with ArcelorMittal's HBI facility in Texas, creates a powerful, vertically integrated low-carbon steel production chain. This aligns with increasing demand for "green steel" from automotive and other sectors. The potential for additional investments in a second EAF and electrical steel production further enhances the strategic value of this acquisition. It's a clear signal of ArcelorMittal's commitment to growing its U.S. presence and adapting to evolving market demands.

11 October 2024, 08:30 CET

ArcelorMittal (the “Company”, “Group”) announces it has entered into a definitive Equity Purchase Agreement (the “Agreement”) with Nippon Steel Corporation (“NSC”) pursuant to which ArcelorMittal will purchase NSC’s 50% equity interest in the AM/NS Calvert Joint Venture (the “Transaction”). The Transaction has been entered in to at the request of NSC to address regulatory concerns pursuant to its agreed acquisition of US Steel. The Transaction is subject to NSC completing its pending acquisition of US Steel, which is subject to various other regulatory requirements.

Under the terms of the agreement, ArcelorMittal will pay $1 consideration for the Transaction; further, NSC will inject cash and forgive partner loans in an amount estimated to be approximately $0.9 billion.

There are no assurances or guarantees that NSC will complete its acquisition of US Steel. Should NSC not complete its acquisition of US Steel, then the Agreement will not come into effect and the AM/NS Calvert Joint Venture will continue.

Background on AM/NS Calvert

A Joint Venture between ArcelorMittal and NSC acquired Thyssen Krupp USA in February 2014.

Calvert is the most capable finishing facility in North America, supplying the highest quality steel solutions to the most demanding customers in the region:

• State-of-the-art hot strip mill (HSM) designed to roll advanced high strength steels (AHSS), Line Pipe & Stainless products
• Continuous Pickling Line (CPS) and coupled Pickle Line-Tandem Cold Mill (PLTCM) optimized for auto production (including exposed)
• Coating Lines, galvanized and aluminized, which can supply advanced automotive grades including Gen3 AHSS and Press Hardened Steel (PHS)
  
  

The new 1.5mtpa electric arc furnace (EAF) currently under construction, integrated with ArcelorMittal’s HBI facility in Texas, will enable Calvert to supply automotive customers with lower CO₂ embodied steel, melted and poured in the United States of America.

With more investments under consideration – a second EAF and a Non-Grain Oriented Electrical Steels line – Calvert will continue to fulfil its critical role in supplying domestic manufacturing industries.

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 $68.3 billion, produced 58.1 million metric tonnes of crude steel and 42.0 million tonnes of iron ore.

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 E-mail	+33 171 921 026 investor.relations@arcelormittal.com
Contact information ArcelorMittal Corporate Communications
Paul Weigh Tel: E-mail:	+44 20 3214 2419 press@arcelormittal.com

FAQ

What is the value of ArcelorMittal's acquisition of NSC's stake in AM/NS Calvert?

ArcelorMittal will pay $1 for NSC's 50% stake in AM/NS Calvert. Additionally, NSC will inject cash and forgive partner loans totaling approximately $0.9 billion.

Why is ArcelorMittal (MT) acquiring NSC's stake in AM/NS Calvert?

The acquisition is at NSC's request to address regulatory concerns related to NSC's pending acquisition of US Steel. It allows ArcelorMittal to gain full ownership of the advanced steel finishing facility.

What are the key features of the AM/NS Calvert facility?

AM/NS Calvert features a state-of-the-art hot strip mill, continuous pickling line, coating lines, and a new 1.5mtpa electric arc furnace under construction. It's considered the most capable finishing facility in North America.

Is ArcelorMittal's (MT) acquisition of NSC's stake in AM/NS Calvert guaranteed to proceed?

No, the transaction is contingent on NSC completing its pending acquisition of US Steel, which is subject to various regulatory requirements. If NSC doesn't acquire US Steel, the agreement will not come into effect.