Luxembourg, July 9: Laikhsmi N Mittal, one of the richest Indians in the world, has finalised a deal for the acquisition of three companies belonging to the Paris-based Usinor group, the world's second largest steelmaker. Ispat International NV, the flagship of Mittal's LNM group of companies, announced that it had completed all the formalities for the acquisition of Unimetal, Trefileurope and Societe Metallurgique de Revigny (SMR) belonging to the Usinor stable. Ispat International NV, which has its headquarters in Rotterdam, the Netherlands, also appointed the boards of management of the three companies. The activities of these three companies, along with Ispat's other steelmaking operations in Germany and Ireland, will be coordinated by the LNM group's European office in Luxembourg.
Known as Ispat Europe, the Luxembourg office was recently established as the LNM group's hub in an effort to coordinate operations in the continent. The chief executives of the three newly acquired companies are PierreFrentzel, director general of Ispat Unimetal, Claude Bordes, director general of Trefileurope, and Jean-Marie Bastien, director general of SMR. On May 14, Ispat International reached what was then described then as an "agreement in principle" with Usinor to acquire the three companies. Consultations were also held with the French Unimetal Workers' Committee to resolve any labour dispute arising out of the takeover, in accordance with French law. Under the agreement with Usinor, the total value of the transaction is FF (French francs) 633 million (about $106.9 million), of which Ispat International will immediately pay FF 130 million ($21.3 million). The balance will be paid in 14 equal semi-annual instalments.
On the finalisation of the deal, Mittal, the chairman and CEO of Ispat, said: "The acquisition of Unimetal, Trefileurope and SMR reflects Ispat International's commitment to the long-term market, where we can use our established track record and experience to significantly grow and strengthen ourposition as the leading producer in Europe." Explaining the reasons behind the acquisition of the Usinor companies, Mittal said it would allow him to offer a complete range of sizes and grades of high-quality on products and improved service to his growing customer base in Europe. It would also help him strengthen his market leadership in this segment, he added. "There are also a number of marketing, distribution as well as operating synergies resulting from our different operations, in particular Ispat Germany, that will enable us to improve the quality of products as well as reduce the cost of production at these companies," he observed. Unimetal, Trefileurope and SMR collectively manufacture and sell worldwide approximately 1.5 million tonnes of billets, bright bar, bar in coil, wire rods and wire products. Their consolidated audited sales turnover for 1998 was approximately FF 4.5 billion ($736.5 million). Usinor reported a total group sales of $15.8 billion and 21 million tonnes of steel was produced in1998. The sale of the three companies came as Usinor found its earnings slipping, thanks to a 26 per cent drop in benchmark steel prices during the first quarter because of what is euphemistically described in European steel circles as a "tidal wave of cheap Asian steel imports," although it sold more steel to builders and carmakers. A Usinor spokesman had recently even forecast that the company's results would be "negative" for the first half of 1999.
According to European steel analysts, Mittal's Ispat Interational N.V. has emerged as one of the fastest-growing and most econmical producers of steel in the world. In 1998, its consolidated sales amounted to approximately $3.5 billion from deliveries of nearly 11 million tonnes of semi-finished products and long and flat-rolled products. Ispat has major steel-making facilities in the U.S., Mexico, Trinidad, Canada, Germany, France and Ireland. It also markets products in over 55 countries.
The LNM group also has steelmaking operations in Kazakhstan andIndonesia. --India Abroad News Service (Credit Mandatory) ends/ M group also has steelmaking operations in Kazakhstan and Indonesia.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.