Mittal Steel back on the acquisition warpath
Mittal Steel, still in the final stages of its acquisition of Arcelor, is still intent on further growth even as its increases its #1 worldwide position. It recently announced the acquisition of Mexico's #1 steelmaker Sicartsa for $1.4 billion. The deal includes one mill in Mexico and a small one in Texas.
The deal makes sense for Mittal, as Sicartsa has among its assets a considerable iron ore mining operations, enough to supply its mills for the next thirty ears, according to a Wall Street Journal article "Mittal Returns to Acquisitions With Mexico Deal" (12/21/06). That's a big deal given iron ore price pressures.
Mittal is buying the company from Grupo Villacero Mexico's #1 distributor of steel products. The two companies will enter a joint venture to sell steel in the US as well as Mexico. The company is particularly strong in construction steel, where US-based Nucor and Commercial Metals, and Brazilian-based Gerdau have strong US shares.
The deal adds about 6.7 million tons a year to Mittal's current 143 tons.
Mittal's already owns an existing plant in Mexico, adjacent to the Sicartsa plant. Both mills were owned by the Mexican government until it privatized them in 1991. The two companies already jointly run shipping and some processing operations.
The deal has to strike even more fear into other steel companies, fearful of being crushed by Mittal. Without doubt, a new rounc in the feeding frenzy is on.
