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ArcelorMittal Acquires ThyssenKrupp Steel USA with Nippon Steel and Sumitomo Metal Corporation

TK Steel USA is a steel processing plant situated in Calvert, Alabama, with a total capacity of 5,3 Mt including hot rolling, cold rolling, coating and finishing lines. The transaction – which is expected to deliver USD 60 million of annual synergies – will be financed through a combination of equity and debt at the joint venture level. The transaction includes a six-year agreement to purchase 2 Mt of slab annually from TK CSA, an integrated steel mill complex located in Rio de Janeiro/BR, using a market-based price formula. TK CSA has an option to extend the agreement for an additional three years at more favourable terms to the JV, compared with the initial time period. The remaining slab balance will be sourced from ArcelorMittal plants in the USA, Brazil and Mexico.  ArcelorMittal will be responsible for marketing the product on behalf of the JV. The price ArcelorMittal will receive for its slabs will be determined by the volume, price and cost performance of the JV. The automotive market is an identified franchise business for ArcelorMittal and the Calvert facility will complement ArcelorMittal’s existing auto business in USA. The company’s current facilities for the auto segment in  USA are at high levels of capacity utilisation and the NAFTA automotive market is expected to show an increase in vehicle production of approximately 15 % over the next decade. This acquisition will also strengthen ArcelorMittal’s position in supplying the NAFTA energy industry, which is expected to demonstrate growing demand for energy pipe and tube products due to increases in oil and natural gas exploration and production. ArcelorMittal and NSSMC have a proven track record of successful collaboration for the auto industry in North America through the I/N Tek and Kote joint ventures, which were established in 1987 and are located in New Carlisle, Indiana. The transaction is subject to regulatory approvals in certain markets.

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