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Steel Companies Look to Inorganic Growth amid Market Revival

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Acquisitions

Earlier this week, ArcelorMittal (MT), the world’s largest steel producer, announced that it would bid for the stressed assets of Indian steel company Essar Steel (EPI). The announcement came after a couple of other acquisitions by ArcelorMittal.

Last year, a consortium led by ArcelorMittal reached a binding agreement to buy the Ilva steel plant in Italy. The company is also looking at an acquisition in Brazil. According to Reuters, citing Jefferson de Paula, ArcelorMittal’s executive vice president, “The Brazilian unit of ArcelorMittal expects to conclude in the second quarter the takeover of rival Votorantim Siderurgia SA to become the country’s largest long steel producer.”

 

Other steel companies, including AK Steel (AKS) and Nucor (NUE), have made sizeable acquisitions in the last couple of years as green shoots have emerged in global steel markets (X).

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Past acquisitions

ArcelorMittal is no stranger to mergers and acquisitions and has made multiple acquisitions in its quest for growth. ArcelorMittal was preceded by Mittal Steel, which was founded in 1976 by Lakshmi N. Mittal. Some of the company’s major acquisitions included Siderúrgica Del Balsas in Mexico in 1992, Sidbec in Canada in 1994, and Karmet in Kazakhstan and Hamburger Stahlwerke in Germany in 1995.

In mid-2006, Mittal Steel acquired Arcelor NV, which was the biggest steelmaker at that time. The deal wasn’t smooth and was preceded by a bitter corporate war. In 2007, ArcelorMittal continued its expansion strategy and announced 35 transactions worldwide. Since its inception, the company has built its reputation on turning around sick steel plants.

In this series, we’ll see how ArcelorMittal’s recent acquisitions could help it. Let’s begin by looking at the company’s foray into India.

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