ArcelorMittal plans to acquire 28.4% stake in Vallourec for $1 billion

Global steel company ArcelorMittal has announced the signing of a purchase and sale agreement for a 28.4% stake in Vallourec, one of the world’s leading producers of seamless pipes, for $1.04 billion (€955 million). This is stated in the company’s press release.

ArcelorMittal said it had acquired 65.24 million shares of Vallourec at €14.64 per share from funds managed by Apollo Global Management. The transaction is subject to regulatory approval and is expected to close in the second half of 2024. At the same time, the company does not intend to launch a tender offer for the remaining shares of Vallourec within the next 6 months.

«Thanks to the successful restructuring of Vallourec in recent years, this transaction represents a compelling opportunity to increase ArcelorMittal’s presence in the value-added pipe market,» the statement said.

Vallourec specializes in manufacturing products for the energy, automotive and construction industries. 85% of the company’s rolling capacity is centered around low-carbon integrated production centers in the United States and Brazil, both of which are important strategic markets for ArcelorMittal.

“Vallourec is a quality, high added-value tubular business, with established positions of strength in the attractive Brazilian and US markets. As a producer of premium tubular solutions, it has a critical role to play in the energy transition, producing vital products for hydrogen, CCS and geothermal applications, for which demand is expected to grow. It also has a comparatively low carbon footprint with ambitious improvement targets. We look forward to being part of the company’s future,» comments Aditya Mittal, CEO of ArcelorMittal.

In 2023, Vallourec reported EBITDA of €1.2 billion on sales of €5.1 billion. The company’s EBITDA is expected to grow by 10-15% by 2030 due to the global transition to green production.

Vallourec’s steelmaking facilities in Brazil and the United States have low carbon emissions – 0.945 t/CO₂ per ton of steel and 0.290 t/CO₂ per ton of steel, respectively. At the same time, the company plans to reduce emissions by 30% by 2030 and by 35% by 2035 (compared to the base year of 2021).

As GMK Center reported earlier, global pipe production in 2023 increased by 15% compared to 2022 – to about 170 million tons. After a slight downturn in 2022, global pipe production has recovered. The upward trend is expected to continue in 2024.