For NLMK, the access to rolling facilities of Duferco is the best chance to step up the share of product with high additional value in sales structure.
Photo: Dmitry Lebedev
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NLMK, Duferco Fused for $1.6 Billion
The venture of Novolipetsk Steel Works (NLMK) and Duferco costs $1.6 billion; NLMK will pay $805 million for a half and Duferco will contribute the rolling facilities. NLMK owner Vladimir Lisin pays cheap for the chance to increase the depth of steel processing, the analysts speculate. In NLMK, they say the deal’s synergy will reach $55 million a year starting from 2010, while Duferco has obtained a maker of semi-finished products costing half as much as in Europe.
Yesterday, Novolipetsk Steel Works (Russian abbreviation is NLMK) and Swiss Duferco came up with details of the deal that was announced in the mid.-October. NLMK will pay $805 million for 50 percent in Luxembourg-incorporated Steel Invest & Finance S.A., which belongs to Duferco. In settlement for its share, Duferco will contribute 100 percent/majority stakes in 22 companies, including six steel and rolled metal producers in Italy, France, Belgium and the United States with the aggregate output of 4.5 million tons a year and a chain of service stations that are selling 85 percent of Duferco’s product.
In NLMK, they say the deal’s synergy will reach $55 million a year starting from 2010, meaning additional cost attributed to the increase in slab sales to Duferco’s plants (from 0.5 million tons in 2006 to 3.6 million tons by 2012) and NLMK’s share in venture’s profits.
By using the venture, NLMK will materially step up its sales in Europe. The sales of hot rolled metal will go up nearly five fold to 2.4 million tons, cold metal sales will increase almost ten fold to 1.5 million tons, galvanized rolled metal – up nearly ten fold to 0.4 million tons and the sales of heavy plate will nearly double to 1.2 million tons.
www.kommersant.com
All the Article in Russian as of Nov. 28, 2006
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