Steel Mills
SSAB to Acquire Steel Rival Rautaruukki
Written by Sandy Williams
January 22, 2014
SSAB plans to acquire Finnish steel company rival Rautaruukki for 10.1 billion kroner ($1.8 billion) in a deal that the two companies hope will bring a cost savings of 1.4 billion kroner ($254 million) in three years.
The major stockholders at both companies, Solidium Oy (39.7 shares) at Rautaruukki and Industrivaerden AB (18.2 shares), are supporting the acquisition which needs 90 percent approval by share holders and regulatory approval by the European Union.
A struggling European steel industry, pricing pressure, and regulatory challenges brought the two companies together after a suffering a combined EBIT loss of 977 million kroner (-$177 million) in 2012. The new combined balance sheet as of the end of third quarter 2013 will give the new company an EBIT loss of 594 million kroner (-$108 million) and a net to debt ratio of 59 percent.
SSAB says the combined 17,400 workforce will be trimmed by 5 percent, mostly in Sweden and Finland. The companies together will have an asset base that includes 5 blast furnaces, 2 hot strip mills, 2 cold rolling mills, 2 plate mills and an expanded distribution system. The focus will be on a flexible and cost effective production system able to adapt to market demand along with investment in production development and R&D. The company will produce high strength steels, heavy plate, standard trip and tubular products with both a Nordic and US-based presence.
The company will be based in Stockholm and headed by SSAB chief executive officer Martin Lindqvist. Rautaruukki chief executive officer Sakari Tamminen will retire following completion of the deal and SSAB’s shareholder meeting planned for April 9.
SMU Note: Steel Market Update is conducting our next Steel 101 workshop in Mobile, AL which will include a tour of the SSAB steel mill located outside of Mobile. More information can be found on our website or you can contact our offices: 800-432-3475.
Sandy Williams
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