Russian steelmaker Severstal sells US plants for $2.3 bn
21 Jul 2014
OAO Severstal, the Russian steelmaker controlled by billionaire Alexey Mordashov, has agreed to sell its US plants to Steel Dynamics Inc and AK Steel Holding Corp for $2.33 billion, marking its exit from the country.
Steel Dynamics will buy the Russian company's plant in Columbus and Mississippi, while AK Steel would buy its factory in Dearborn, Michigan, Severstal said in a statement by today.
Severstal seeks to exit the US, as tensions between the US and Russia escalate over Ukraine, where pro-Russian separatists continue to control key cities. The US and EU had not targeted Mordashov and Severstal with economic sanctions.
The billionaire held a stake of around 6 per cent through various companies, in OAO Bank Rossiya, that had been targeted by the US.
According to the company, talks started at the end of last year and the transactions concluded Severstal's review of strategic options for its North American operations. The company's shares were up around 2.3 per cent to 309 rubles, the highest since 27 May.
According to a statement by Steel Dynamics, the $1.625 billion purchase of Severstal Columbus would be funded through a mix of cash and debt.
The 2007-built mill is one of the newest mini-mills in North America, it said, with a production capacity of 3.4 million tons, boosting Steel Dynamics' annual steel shipping capacity to 11 million tons.
In a press release A K Steel said it had signed an agreement to acquire Severstal North America's integrated steelmaking assets located in Dearborn, Michigan for $700 million in cash. The acquisition also includes a cokemaking facility and interests in three joint ventures that process flat-rolled steel products.
The Dearborn plant produces high-quality, flat-rolled steels primarily for the automotive, construction and appliance markets, and completed a large-scale modernisation in 2011.
It is strategically located in close proximity to many of AK Steel's customers, and the assets at the steel plant and the other acquired facilities complement AK Steel's existing carbon steel operations.
"The acquisition of Severstal Dearborn allows us to grow our business profitability and better serve our customers," said James L Wainscott, chairman, president and CEO of AK Steel. "It furthers our automotive strategy and strengthens our carbon steelmaking footprint. It also combines great employees at Dearborn with great employees at AK Steel to strengthen a terrific company that is better able to compete, and to win, in the global steel marketplace. We welcome the employees of Dearborn to AK Steel."
