Arcelor-Mittal, Lakshmi Mittal’s steel empire, is understood to be eyeing AK Steel, its smaller Ohio-based rival. The deal is likely to value AK, which began life more than 100 years ago as American Rolling Mills Corporation, at as much as $40 per share, or just under $4.5bn, FT Alphaville understands.
Shares in AK jumped 3.5 per cent to $32 in New York on Monday as news of the impending deal appeared to leak.
AK, a Fortune 500 company, is probably best know for producing Armco barriers installed around Formula One racing tracks, but the company also produces a range of carbon, stainless and electrical steels, as well as aluminium coated steel for car makers.
As well as Ohio, the company has steelmaking and finishing plants in Indiana, Kentucky and Pennsylvania, together with two steel tube plants in Ohio and Indiana. AK recently announced a leap in first quarter earnings, turning in $62.7m in the three months to end-march, compared with $6.2m a year earlier. Sales were $1.72bn in the quarter, against $1.44bn last year. It has also just come out of a protracted labour dispute.
For Mittal, the putative deal represents something of a bolt-on after last year’s acrimonious takeover of Luxembourg’s Arcelor for $30bn.
In a sector going through an intense period of consolidation, the Arcelor deal was followed by Russia’s Evraz taking over Oregon Steel and India’s Tata Steel acquisition of Corus.
