NEW YORK An ArcelorMittal SA executive confirmed the companys interest in ThyssenKrupp AGs Calvert, Ala., facility during a conference call with investors addressing the companys capital-raising and debt-reduction targets.
The Luxembourg-based steelmaker announced a plan to raise $3.5 billion in capital through a combined offering of common stock and convertible notes on the call Wednesday morning. That offering and select divestitures from the companys Mines Canada and Kalagadi Manganese assets are parts of an initiative to cut the companys debt to $17 billion by June 30 from $22 billion as of Dec. 31.
The plan also includes a bid for ThyssenKrupps Calvert facility, chief financial officer Aditya Mittal said when asked about ArcelorMittals interest in the ThyssenKrupp assets.
"In terms of (ThyssenKrupp) Alabama, I think its clearly a world-class asset and would end up serving the highest segments in the North American market," Mittal said. "We do believe there are synergies with our existing operations, and we believe we have structured a bid which will allow us to participate ... (and) not detract us from achieving a net debt target of $17 billion."
That plan doesnt leave room for a high bid for the ThyssenKrupp facility, analysts told AMM. One analyst described ThyssenKrupp as a "side note" to ArcelorMittals debt reduction plan.
Analysts said the bid would need to be about $1 billion to make the $17-billion target feasible.
"When I look around and try to figure out who is a logical buyer, the one name that comes up is ArcelorMittal, because to run that plant in Alabama, you have to have slabs," Charles Bradford, president of New York-based Bradford Research Inc., said. "If they could get a price of $1 billion, they could do it."
A third analyst expressed uncertainty about the seriousness of ArcelorMittals interest. "I think they are trying to keep their options open," Bridget Freas, a senior analyst at Chicago-based Morningstar Inc., told AMM. "It would be hard for them to hit that target if they are going to be shelling out (for) the Alabama facility," she added, although she said she wouldnt rule anything out.
Whether Essen, Germany-based ThyssenKrupp would be willing to take a bid as low as $1 billion for the facility remains to be seen, analysts said.
Another option that might make sense would be a partnership, Bradford noted, cautioning, however, that antitrust issues would likely be a hurdle for ArcelorMittal were it to add Calvert to its U.S. flat-rolled holdings.