Russians to buy U.S. steel assets
Two Russian steel companies are buying more of the nation's steel assets in separate deals -- the former Bethlehem Steel Co. mill in Sparrows Point, Md., and the former Koppel Steel Co. plants in Beaver County.
Russian steelmaker OAO Severstal, run by billionaire Alexei Modashov, said Friday it reached an agreement to buy the Sparrows Point plant from ArcelorMittal for $810 million. ArcelorMittal is run by billionaire Lakshmi Mittal.
In the other Russian acquisition, the former Koppel Steel plants in Koppel and Ambridge were part of the deal by Svenskt Stal AB of Sweden to sell its Ipsco North American tubular business to Evraz Group SA of Moscow for $4.025 billion, SSAB said last week.
That Russian steel company, in turn, plans to retain most of the Canadian mills but sell most of the U.S. portion of the business to Russia's OAO TMK, the world's second-largest producer of steel pipes and tubes. It was not known if the Koppel Steel plants were part of the sale by Evraz.
The local Koppel Steel plants, which were part of the Babcock & Wilcox Co. before closing in 1988, make tubing for the oil and natural gas industries.
SSAB had acquired Ipsco's North American tubular business in May 2007, when it bought the Canadian steelmaker Ipsco for $7.7 billion. Ipsco, in turn, had spent $1.46 billion to buy the U.S. tubular plants, including Koppel's facilities, from NS Group Inc. of Newport, Ky., in September 2006.
Neither officials at the Koppel Steel plants, nor Rick Galiano, president of United Steelworkers Local 9305, which represents Koppel's production workers, could be reached for comment.
ArcelorMittal, formed by a merger of Mittal Steel and Arcelor SA of Luxembourg, agreed to sell the Sparrows Point plant to resolve U.S. Department of Justice antitrust concerns, but a $1.35 billion deal fell through in December.
The $1.35 billion deal to sell the plant to E2 Acquisition Corp., an international investment group led by Esmark Inc., of Chicago Heights, Ill., collapsed in December due to what Mittal said was E2's inability to secure financing.
E2 Acquisition Chief Executive Craig Bouchard, who was president of Esmark's Wheeling-Pittsburgh Steel division, had said earlier this year the investors intended to regroup and prepare another bid. Neither Craig Bouchard, nor his brother James, CEO of Esmark, could be reached for comment.
Esmark has said it is reviewing Wheeling-Pittsburgh Steel's operations, with the intention to reduce costs. James Bouchard said earlier this month no decision has been made on the future of Wheeling-Pitt's Allenport plant in Washington County.
Bill Kinney, president of the United Steelworkers Local 1187 at the plant, could not be reached for comment.
Charles Bradford, a steel industry analyst with Bradford/Soleil Securities, said the sale price of Sparrows Point was in line with his valuation of the plant.
"It's pretty clear the last time the people who won the bid couldn't finance it," Bradford said. Severstal has sufficient money and should not have any problem paying for the plant, Bradford said.
In Washington, Gina Talamona, a spokeswoman for the U.S. Department of Justice, said its antitrust division "expects to conduct a prompt review of the agreement and the proposed acquirer."