Posted on 24 Jul 2014
OAO Severstal, the Russian steelmaker
controlled by billionaire Alexey Mordashov, agreed to sell its US plants to
Steel Dynamics Inc and AK Steel Holding Corp for US$2.33bil, marking its exit from
the country.
Steel Dynamics would buy Severstal’s plant
in Columbus, Mississippi, while AK Steel would purchase the factory in
Dearborn, Michigan, Severstal said yesterday in a statement.
Severstal’s imminent departure from the
United States comes amid heightened tensions between the US and Russia over
Ukraine, where pro-Russian separatists continue to control key cities.
Mordashov and Severstal haven’t been targetted by US or European Union economic
sanctions. The billionaire’s companies as of April controlled a stake of about
6% in OAO Bank Rossiya, which has been targetted by the United States.
Work on the sales started at the end of
last year and the transactions concluded Severstal’s review of strategic
options for its North American operations, it said. The company’s shares rose
as much as 2.3% to 309 rubles, the highest since May 27, and traded at 306.2
rubles by 11.35am in Moscow.
Steel Dynamics’ US$1.625bil purchase of
Severstal Columbus would be funded with a mix of cash and debt, the company
said in a statement.
Built in 2007, Columbus was one of the
newest mini-mills in North America, it said. The mill has a production capacity
of 3.4 million tonnes, boosting Steel Dynamics’ annual steel shipping capacity
to 11 million tonnes.
AK Steel was paying US$700mil in cash for
the steelmaking assets in Dearborn, Michigan, it said.
The company was funding the acquisition
through a debt and share deal it expected to complete in the fourth quarter,
the producer said in a statement.
“The sale of Columbus and Dearborn unlocks
substantial value to Severstal’s shareholders,” Mordashov, who is chief
executive officer of the Cherepovets-based company, said in the statement.
Severstal North America had developed into one of the most efficient steel
producers in the United State, he said.
The transaction wasn’t subject to any
financing conditions and was expected to be realised by the end of this year,
Severstal said.
Bloomberg reported July 19 that Severstal
was close to an agreement to sell the plants.
“The deal is just good for the company,”
Morgan Stanley analyst Dmitry Kolomytsyn said by phone from Moscow before the
announcement. Severstal has been looking for a buyer since December “so the
agreement to sell those assets has nothing to do with the Russia-West tensions
over Ukraine.” — Bloomberg
