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ISG Executives to Hold Key Positions at New Mittal Steel
ROTTERDAM, The Netherlands -- Following completion of Ispat International N.V.'s acquisition of LNM Holdings N.V. announced yesterday, the company will be renamed Mittal Steel Co. N.V. The new company includes International Steel Group Inc., whose merger with Ispat International also was announced yesterday. The two top ISG executives will hold key positions in the new company.The combined Mittal Steel will be the largest and most global steel company in the world and will be listed on the New York Stock Exchange and Euronext Amsterdam, officials said. Mittal Steel will have operations in 14 countries on four continents and employ 165,000. The companies have signed a Letter of Agreement with the United Steelworkers of America and the Independent Steelworkers Union.Terms of the ISG agreement call for ISG shareholders to receive $21 per share in cash and a number of Mittal Steel shares equal to $21 divided by the average closing price of Mittal Steel for the 20 trading days prior to closing, up to a maximum of 0.6087 shares and a minimum of 0.4793 shares. The value in the merger is expected to be $42 per ISG share, or $4.5 billion in the aggregate.Wilbur L. Ross, chairman of ISG, will become a board member of Mittal Steel, and Rodney Mott, ISG president and chief executive officer, will become CEO of Mittal's combined U.S. operations. Lakshmi N. Mittal will be chairman and CEO, and Aditya Mittal will be president, group chief financial officer and a board member. Malay Mukherjee will be chief operating officer."This transaction achieves all our financial and business objectives," commented ISG's Ross. "It provides our shareholders with an excellent rate of return and the potential for strong future appreciation. It accelerates by several years our strategy to become a leading global steelmaker. By joining with Mittal Steel, respected in the global steel industry for both its strategic vision and operational excellence, we have provided our shareholders immediate value, as well as participation in a new, financially strong, profitable global enterprise with excellent growth prospects.""For our employees and communities especially, both of whom have experienced the contraction of the industry, this combination provides a strong measure of stability and the greater potential of a financially sound and secure steel company, with a diversity of operations in the United States and internationally," added ISG's Mott. "Our scale and capabilities, strong synergies, and a dynamic product offering will enable us to serve customers even better. This is an exciting combination borne out of strength."Mittal Steel's strategy will be to enhance long-term shareholder value both by continuously strengthening its position as a low-cost, high quality steel producer and by continuing to play an integral role in a globally diverse steel industry, officials said. The company is well positioned in key areas that management believes will experience significant growth in steel consumption. The combined company will produce a comprehensive portfolio of both flat and long steel products and serve all the major steel consuming sectors, including the automotive, appliance, machinery and construction sectors."The combined company will have excellent positions in raw materials, particularly coal, coke and iron ore, as well as strong positions in key end sectors," said Lakshimi Mittal. "This combination also provides Mittal Steel with a more significant presence in important industrialized economies such as those in North America and Europe and in economies that are expected to experience above average growth in steel consumption, including Asia and Africa."Under the terms of the agreement with LNM Holdings, Ispat International will issue 525 million new shares, valued at $13.3 billion at Friday's closing share price on the New York Stock Exchange, to the shareholder of LNM Holdings. The new shares will comprise approximately 140 million class A shares and approximately 385 million class B shares, which is in the same proportion as the Ispat International shares currently held by LNM Holdings' controlling shareholder.ISG is one of the largest integrated steel producers in North America and among the top 10 globally. Since being formed in April 2002, the company has grown rapidly by acquiring the steel-making assets of LTV, Acme Steel, Bethlehem Steel, Weirton Steel and Georgetown. ISG has annual total raw steel production capacity of approximately 20 million tons and is targeting 2004 revenues of approximately $9 billionLNM Holdings is one of the world's largest and most profitable steel companies, with operations in eight countries, and also has substantial mining assets. Revenues were $9.9 billion and operating income was $3.2 billion in the first nine months of 2004, officials reported. The company has annual total raw steel production capacity of over 32 million tons and owns significant mining assets, annually producing approximately 18 million metric tonnes of iron ore, 13 million metric tonnes of coke and 12 million metric tonnes of coal. Ispat International operates in six countries in North America and Western Europe, including the United States through Ispat Inland Inc. The company has annual total raw steel production capacity of over 18 million tons and is targeting 2004 revenues of approximately $8.3 billion.The combination of Ispat International and LNM Holdings is expected to be completed by the end of 2004. Following completion of the LNM Holdings acquisition, Ispat International shareholders will own approximately 18.3% of the combined company and LNM Holdings shareholders will own approximately 81.7%.The merger with ISG is subject to approval by the shareholders of ISG and Ispat International or Mittal Steel, depending on the timing of the shareholder vote, as well as regulatory approvals and satisfaction of other customary closing conditions. The transaction is expected to be completed by the end of the first quarter of 2005. Following the completion of this transaction, ISG shareholders will own between approximately 6.9% and 8.6%, depending on the average price of Mittal Steel shares for the 20 trading days prior to the merger."