Last week, a report by leading Russian business newspaper Kommersant set U.S. metals investors all a-twitter over the possibility that Russian steelmaker Severstal might team up with fellow countryman Mettaloinvest to bid for U.S. Steel
According to Friday's story, Severstal is negotiating with the world's largest steelmaker, MittalSteel
Last week, Arcelor made such an attempt; the foundation dutifully blocked it; and now, Arcelor finds itself compelled to sell off some other part of its empire in order to assuage the concerns of the antitrust powers that be. Arcelor has apparently identified two potential targets for sell-off: the Sparrows Point, Md., facility of what used to be Bethlehem Steel, and Weirton Steel in West Virginia.
Severstal, which itself played a part in the Mittal-Arcelor saga (as a potential white knight), may now be looking for a place to deploy the cash it did not spend on acquiring a stake in Arcelor. With Mittal now looking like a motivated seller, Severstal could well be looking to pick up some U.S. steel assets -- as opposed to "U.S. Steel," itself -- on the cheap
Which brings us to Weirton. With $468.3 million in sales over the last 12 months, the firm's just a fraction the size of mighty U.S. Steel and its $15.4 billion in sales. That (plus Mittal's motivation to offer an attractive price) should make it much easier for Severstal to afford, and much easier to digest once acquired. With only 2,100 employees, in fact, Weirton is smaller than the firm that gave Severstal its initial entrance to the U.S. market: Rouge Steel.
My guess: If Severstal does make another buy in the U.S., it's more likely to pick up useful bits and pieces, such as Weirton, than to try for a major buyout of a national champion like U.S. Steel.
My other guess: If we get confirmation that Weirton will be sold to Severstal, then the surge in market cap that U.S. Steel got in response to last week's rumors will quickly evaporate.
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