Severstal approaches Tata, Arcelor to sell Italian unit

MUMBAI: OAO Severstal, Russia’s largest steelmaker, is planning to sell one of its units in Italy and has reportedly approached Tata Steel and ArcelorMittal, according to international media reports on Thursday.

Severstal is seeking to sell 80% stake in steelmaker Lucchini SpA by April and has been meeting strategic players, including trade buyers and financial investors, said the reports.

People tracking the development said the most likely foreign bidders could be Ukrain’s Metinvest and Brazil’s Sidenor. “There are 4 players in the race... Two are steel companies, one hedge fund and a PE player,” research firm Steel Business Briefing managing editor Roger Manser told ET Now.

According to people familiar with the development, with Tata Steel yet to resolve issues at its UK unit, it was unlikely that it would be keen on an acquisition now.
Tata Steel and ArcelorMittal declined to comment.

In 2005, Severstal acquired Lucchini for e499 million (about Rs 3,243 crore at current exchange rates). However, slow demand and cheaper imports eroded Lucchini’s profitability, prompting Severstal to look for buyers. Lucchini makes rail steel and at 1.8 million tonnes annual capacity, it is Italy’s second largest steel company.

Italian media have cited other private equity firms including Blackstone, Platinum and Apollo as potential buyers.
Meanwhile, Severstal said on Thursday it acquired the remaining 20.2% in Lucchini from the Lucchini family in order to take full control of the company.