Do-it-yourself M&A, the Arcelor way
The world's largest steel company's M&A team is as big as an investment bank's steel sector corporate finance division. Arcelor reckons, though, that its team's superior sector knowledge makes it more effective at doing deals that enhance core assets, deliver synergies and boost shareholder value. Kathryn Tully reports.
THE IN-HOUSE mergers and acquisitions team at Arcelor has been busy of late. Itself a product of a three-way merger between Luxembourg's Arbed, Spain's Aceralia and France's Usinor completed in February 2002, the world's biggest steel company – with 98,000 employees in over 60 countries and 600 different companies – has spent the past two years restructuring the business to make it all fit together.
During that time, it has also had to contend with the fact the worldwide rebound in industrial steel production forecast at the beginning of 2003 did not materialize. Weak demand in the US and Europe tempered strong growth in the Middle East, eastern Europe and Asia.
Since former investment banker Rama Ayman, general manager of mergers and acquisitions, joined 16 months ago, Arcelor has made 15 divestitures and seven acquisitions to comply with competition requirements, refocus on core assets and growth areas and help to deliver merger synergies worth e405 million.
In the space of two days in February, the company finalized the sale of its tubes business with revenues of e587 million to Condesa of Spain and announced the sale of its US stainless-steel subsidiary J&L Speciality Steel to a subsidiary of Allegheny Technologies of the US.