16 June 2017 - ArcelorMittal ('the
Company') and Marcegaglia announce that AM Investco Italy Srl ('AM
Investco') has concluded the exclusive negotiation phase and
reached a binding agreement concerning the lease and obligation to
purchase Ilva S.p.A and its subsidiaries with the Italian
Government. The ancillary documentation will be completed by 30
June. Intesa Sanpaolo will formally join the consortium before
transaction closing.
Strategic highlights
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Unique opportunity to acquire a major,
integrated steelmaking asset which is Europe's largest single steel
site, in Europe's second largest steel market
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Robust investment plan to materially improve
Ilva's environmental footprint and realise its full potential
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Identified synergies of €310 million targeted by
2020 (excludes impact from fixed cost reductions and volume
improvements)
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Ilva expected to be EBITDA accretive to
ArcelorMittal in year one, and free cash flow accretive in year
three.
Transaction highlights and key
details of AM Investco's plans for Ilva include:
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Purchase price of €1.8 billion, with annual
leasing costs of €180 million to be paid in quarterly installments.
Ilva's assets will be initially leased by AM Investco, with rental
payments qualifying as down payments against the purchase price.
Start of lease expected around year-end 2017, subject to regulatory
authorisations. Lease period to be minimum of two years.
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Investments of c. €2.4 billion (c. €2.1 billion
net of Riva Group contribution) over a seven-year period:
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Industrial CAPEX of c. €1.3 billion, supporting
an extensive industrial plan; investment programme focussed on
blast furnaces, steel shops and finishing lines
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Environmental CAPEX of c. €1.1 billion that will
ensure Ilva complies with the Integrated Environmental
Authorisation (AIA) as set out by the Italian Government and will
materially improve Ilva's environmental performance in areas
including air emissions and water treatment; environmental CAPEX
includes remediation spend of €288 million, which will be funded
with funds seized by the Italian Government from the Riva Group,
Ilva's former owners; further intention to introduce breakthrough
low-carbon technologies, including carbon capture and re-use, in
the future; and commitment to use DRI when there are the conditions
of economic sustainability coherent with the industrial
plan
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Finished steel shipments to systematically
increase to 9.5 million tonnes, by 2023. Crude steel production
limited to 6 million tonnes per annum until AIA provisions complied
with; once achieved, commitment to restart blast furnace #5 and
increase crude steel production to 8 million tonnes per annum;
crude steel production to be supplemented by imported slabs and hot
rolled coil, in order to maximise utilisation of Ilva's finishing
facilities, with a commitment to keep at least 10,000 employees for
the entire duration of the industrial plan according to the outcome
of negotiations with the unions.
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€10 million start-up investment in new research
and development (R&D) centre in Taranto, which will initially
focus on ensuring a successful deployment of the industrial,
environment and commercial plans, while also ensuring a smooth
transfer of ArcelorMittal R&D intellectual property and
knowledge to enhance operationally efficiency, quality and
productivity at all Ilva plants.
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The assets will be transferred to AM Investco
free of long term liabilities and financial debt and includes €1
billion of net working capital.
Strategic rationale
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Ilva represents a unique opportunity to add
significant value to ArcelorMittal's European business
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Ilva is the largest, and only integrated,
steelmaker in Italy. Its main production facility in Taranto is
strategically well located, sitting next to one of Europe's largest
deep-water ports, hence enabling easy access to raw materials. Ilva
also has significant steel finishing capacity, in Taranto, Novi
Ligure and Genova
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It provides ArcelorMittal with a primary
production presence in Italy, Europe's second largest steel
consuming market, and a country in which the Company currently has
no primary steelmaking capacity
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Italy imports between 60 and 70% of its flat
steel requirements, in part due to a decline in Ilva's output
because of numerous commercial, quality and environmental issues it
has faced in the recent past; ArcelorMittal believes that, over
time, Ilva's production levels and competitiveness can be
restored
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ArcelorMittal can accelerate Ilva's turnaround
through:
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Leveraging ArcelorMittal's high-added value
product range, particularly in the automotive market, and upgrading
Ilva's production facilities in order to extend and improve its
product range
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Leveraging economies of scale benefits in areas
including procurement
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Opportunity to benchmark against ArcelorMittal's
best performing plants and transfer knowledge and expertise to
improve Ilva's operational performance, quality and
efficiency
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Leveraging ArcelorMittal's world-class research
and development offering, and rapidly deploy steelmaking process
and product solutions at Ilva
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Capturing €310 million of identified synergies.
Commenting Lakshmi N. Mittal,
Chairman and CEO, ArcelorMittal, said:
"Today marks an important step in
the Ilva sales process. We are keen to get started and will
now focus on reaching completion as soon as possible.
"We have a very sound
understanding of what needs to be done to improve the performance
of the company and, importantly, its relationship with stakeholders
and local communities. Our vision is for Ilva to become a
benchmark for modern integrated steelmaking and this will be
realised through the implementation of our industrial and
environmental plans, backed up by significant investment. We have
the capital, the technology, the commercial relationships and the
management depth to bring about a positive
transformation. Stakeholder engagement and transparent
dialogue will also be critical in enabling Ilva to rebuild trust
with its employees and communities.
"We recognise the trust that is
being placed in us as the new owner of Ilva and will take great
care to provide Ilva with the responsible and capable leadership it
deserves and that will be vital for its future success and
sustainability."
Aditya Mittal, CEO of
ArcelorMittal Europe and group CFO, said:
"Ilva is an important strategic
acquisition for ArcelorMittal. It provides us with a significant
production presence in a country in which we have no primary
steelmaking capacity, and is complementary to our existing European
business. I believe that it represents a unique opportunity for us,
and am delighted that we have proved successful with our offer. We
have a lot of work to do once the transaction formally closes and
we take up operational control of Ilva, but I believe that we can
improve its performance quickly, and we expect a positive
contribution to EBITDA in year one. Over the longer-term, there is
no reason why Ilva's performance can't be brought in-line with the
best performing assets within our European business."
Antonio Marcegaglia, Chairman and
CEO, Marcegaglia, said:
"We are proud to have a chance to
contribute to the relaunch of such a fundamental asset for the
country, and look forward to working with the trade unions and all
other stakeholders. I am confident that our consortium has all the
attributes required to deliver a successful turnaround, which will
ensure Ilva makes a positive contribution to the Italian economy,
and each of the communities in which it operates."
The agreement is subject to, and will become
effective upon, the satisfaction of certain conditions precedent,
including information and consultation requirements. The actual
sale, and payment of the full purchase price, is subject to the
lifting of seizures against certain Ilva assets by the Court of
Taranto. The asset sale, and payment of the purchase price, will
occur on the later date of the conclusion of the two-year lease
period and the lifting of the seizure of certain assets by the
Court of Taranto. Transaction closing is also subject to EU merger
control approval.
ENDS
ArcelorMittal will hold a conference call hosted
by Lakshmi N. Mittal, Chairman and CEO, and Aditya Mittal, CEO of
ArcelorMittal Europe and group CFO to discuss the agreement to
acquire Ilva on Monday 19 June at 3:30pm CET (2:30pm UK time and
9:30am US eastern time). The dial in numbers are:
Location |
Toll free |
Toll |
Participant Code |
UK |
0800 051
5931 |
+44 203
364 5807 |
31204846# |
US |
+1 866
719 2729 |
+1 240
645 0345 |
31204846# |
France |
0800
914780 |
+33 1
7071 2916 |
31204846# |
Germany |
0800 965
6288 |
+49 692
7134 0801 |
31204846# |
Spain |
90 099
4930 |
+34
911143436 |
31204846# |
Luxembourg |
800
26908 |
+352 27
86 05 07 |
31204846# |
A replay of the conference call will be available
for one week by dialing +49 (0) 1805 2047 088, access code
509823#.
About
ArcelorMittal
ArcelorMittal is the world's
leading steel and mining company, with a presence in 60 countries
and an industrial footprint in 18 countries. Guided by a philosophy
to produce safe, sustainable steel, we are the leading supplier of
quality steel in the major global steel markets including
automotive, construction, household appliances and packaging, with
world-class research and development and outstanding distribution
networks.
Through our core values of
sustainability, quality and leadership, we operate responsibly with
respect to the health, safety and wellbeing of our employees,
contractors and the communities in which we operate.
For us, steel is the fabric of
life, as it is at the heart of the modern world from railways to
cars and washing machines. We are actively researching and
producing steel-based technologies and solutions that make many of
the products and components people use in
their everyday lives more energy
efficient.
We are one of the world's five
largest producers of iron ore and metallurgical coal. With a
geographically diversified portfolio of iron ore and coal assets,
we are strategically positioned to serve our network of steel
plants and the external global market. While our steel operations
are important customers, our supply to the external market is
increasing as we grow.
In 2016, ArcelorMittal had
revenues of $56.8 billion and crude steel production of 90.8
million tonnes, while own iron ore production reached 55.2 million
tonnes.
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/
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