ArcelorMittal, Votorantim Merge Brazil Long Steel Businesses

 | Feb 28, 2017 07:11AM ET

Steel giant ArcelorMittal (NYSE:MT) and Votorantim S.A. have agreed to combine their long steel businesses in Brazil. Pursuant to the definitive agreement, Votorantim’s long steel businesses in Brazil – Votorantim Siderurgia – will become a subsidiary of ArcelorMittal Brasil and Votorantim will hold a minority interest in ArcelorMittal Brasil.

The transaction does not include Votorantim’s long steel operations in Argentina and Colombia. Financial terms of the deal were not divulged.

The companies noted that the merger will result in a long product steel producer with annual crude steel capacity of 5.6 million tons and annual rolling capacity of 5.4 million tons. Production plants include ArcelorMittal Brasil’s sites at Monlevade, Cariacica, Juiz de Fora, Piracicaba and Itauna, and Votorantim Siderurgia’s sites at Barra Mansa and Resende.

The combination is expected to deliver cost, logistical and operational synergies. The production plants of the combined entity are geographically complementary, allowing closer proximity and improved levels of services to its customer base.

The deal is subject to regulatory clearances in Brazil including the approval of the Brazilian antitrust authority. ArcelorMittal Brasil and Votorantim Siderurgia will remain fully separate and independent companies until the deal closure.

ArcelorMittal has outperformed the Zacks categorized Steel-Producers industry over a year, supported by its efforts to reduce debt, lower costs, expand capacity and improve efficiency. The company's shares gained 133.7% over this period while the industry saw a gain of 82.9%.