Arcelor Mittal buys Mexico’s Sicartsa for $1.44 bln
Arcelor Mittal (MT.N: Quote, Profile , Research), the world’s largest steelmaker, will expand its leading position in Mexico with the purchase of integrated steel producer Sicartsa from Grupo Villacero for $1.439 billion.
The two companies will also create a 50-50 distribution and trading joint venture in Mexico and the southern United States, Arcelor Mittal said in a statement on Wednesday issued in Rotterdam and Luxembourg.
Arcelor Mittal said it expected the acquisition to generate $80 million of industrial synergies and a further $50 million in synergies from commercial, procurement and selling, general and administrative activities.
"With the Mexican market expected to grow by up to 6 percent per year over the next 10 years this is the ideal time to expand our presence in this country," Arcelor Mittal Chief Financial Officer Aditya Mittal said in the statement.
Sicartsa is a fully integrated producer of long steel, with an annual production capacity of approximately 2.7 million tonnes from its facilities in Mexico and Texas.
Mittal Steel Lazaro Cardenas is Mexico’s largest steel producer and slab exporter, with a plant capacity of 4 million tonnes per year. It shares its production site with Sicartsa. The site operated as one prior to privatization in 1991.
Through its wholly owned mine, linked directly to the plant via a slurry pipeline, Sicartsa has estimated iron ore reserves of 160 million tonnes, providing 30 years of reserves at current production rates.
Sinatra’s revenue was $956 million in 2004, with earnings before interest, tax, depreciation and amortization of $248 million. It was hit by a strike in 2005.
The transaction is expected to close in the first quarter of 2007, subject to regulatory approval.
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