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POSCO’s interest in Steel Americas heats up outbound M&A market
By Korea HeraldPublished : Oct. 5, 2012 - 20:39
Australia’s Arrium might be steel firm’s preferred target, analysts say
POSCO, the world’s fourth-largest steelmaker, is heating up the outbound M&A market as the company has reportedly entered the race to acquire Steel Americas of German steel giant ThyssenKrupp.
According to an article Thursday from The Bell, a local M&A news provider, POSCO hired Credit Suisse Group as an M&A adviser and has recently sent a letter of intent to buy Steel Americas.
A POSCO spokesperson declined to comment on whether the company was bidding or not. He only said that the company had studied assets of Steel Americas, as other global steel giants would have done. Steel Americas has been on the market for a while due to snowballing losses.
The size of the deal with Steel Americas would be much bigger that of the deal with Arrium, the second biggest Australian steel maker, which POSCO is also looking to buy.
Steel Americas, which has a slab-making facility in Brazil and a rolled steel mill in Calvert, Alabama, is worth 10.2 trillion won according to ThyssenKrupp. Arrium was offered 1.2 trillion won by a consortium that POSCO joined last week.
Market watchers predicted that POSCO would not likely seek two deals at the same time, considering the level of POSCO’s cash reserves, which were 2 trillion won as of the second quarter this year.
“Considering the cost, POSCO might prefer to acquire Arrium rather than Steel Americas,” Min Wook-sik, a Samsung Securities analyst, said.
The business portfolio of the two companies is also different. Arrium runs both mining and steel making businesses, while Steel Americas’ main business is steelmaking.
Despite the prolonged downturn in the steel industry, POSCO is stepping up its M&A activities overseas in a bid to turn a crisis into an opportunity.
“POSCO is healthier than other global steelmakers,” Min said, adding that the steel industry was expected to start recovering early next year.
Samsung Securities forecast that POSCO would continue to reap operating profits of 852.3 billion won in the third quarter of this year, but this is a 21.6 percent drop from the same period last year.
By Seo Jee-yeon (jyseo@heraldcorp.com)
POSCO, the world’s fourth-largest steelmaker, is heating up the outbound M&A market as the company has reportedly entered the race to acquire Steel Americas of German steel giant ThyssenKrupp.
According to an article Thursday from The Bell, a local M&A news provider, POSCO hired Credit Suisse Group as an M&A adviser and has recently sent a letter of intent to buy Steel Americas.
A POSCO spokesperson declined to comment on whether the company was bidding or not. He only said that the company had studied assets of Steel Americas, as other global steel giants would have done. Steel Americas has been on the market for a while due to snowballing losses.
The size of the deal with Steel Americas would be much bigger that of the deal with Arrium, the second biggest Australian steel maker, which POSCO is also looking to buy.
Steel Americas, which has a slab-making facility in Brazil and a rolled steel mill in Calvert, Alabama, is worth 10.2 trillion won according to ThyssenKrupp. Arrium was offered 1.2 trillion won by a consortium that POSCO joined last week.
Market watchers predicted that POSCO would not likely seek two deals at the same time, considering the level of POSCO’s cash reserves, which were 2 trillion won as of the second quarter this year.
“Considering the cost, POSCO might prefer to acquire Arrium rather than Steel Americas,” Min Wook-sik, a Samsung Securities analyst, said.
The business portfolio of the two companies is also different. Arrium runs both mining and steel making businesses, while Steel Americas’ main business is steelmaking.
Despite the prolonged downturn in the steel industry, POSCO is stepping up its M&A activities overseas in a bid to turn a crisis into an opportunity.
“POSCO is healthier than other global steelmakers,” Min said, adding that the steel industry was expected to start recovering early next year.
Samsung Securities forecast that POSCO would continue to reap operating profits of 852.3 billion won in the third quarter of this year, but this is a 21.6 percent drop from the same period last year.
By Seo Jee-yeon (jyseo@heraldcorp.com)
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Articles by Korea Herald
