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Buyers submit bids for Italian steelmaker Ilva

30 Jun 2016 16:00 (+01:00 GMT)
Buyers submit bids for Italian steelmaker Ilva

London, 30 June (Argus) — Two consortiums, one headed by global steelmaker ArcelorMittal and the other by Italian steelmaker Arvedi, today formally submitted bids to acquire Italian steel producer Ilva.

ArcelorMittal made a joint bid with Italian steelmaker Marcegaglia, while the Arvedi-bid led was made through a new company named AcciaItalia, which is backed by state-owned joint stock company Cassa depositi e prestiti Group (CDP) and DelFin Sarl, a holding group controlled by Italian businessman Leonardo Del Vecchio.

Today is the deadline for binding offers to acquire Ilva, which has been up for sale since 2013, when the struggling company was placed under control of a government-appointed commissioner because of its failure to control toxic emissions from its steel mill in Taranto, southern Italy. The government subsequently took full control of Ilva in January 2015 as its financial situation worsened.

Submission of bids will be followed by a 120-day initial discussion period that will focus only on the parts of each bidder's offers that concern improvement of Ilva's environmental performance.

A representative from the European Commission told Argus that Arvedi had sought to partner with Turkish steelmaker Erdemir, but that the Turkish company wishes to wait until November until fully committing.

Arvedi was able to press forward with its bid through the creation of AcciaItalia, in which it is the smallest shareholder with a 22.2pc holding. CDP is the largest AcciaItalia shareholder with a 44.5pc stake, while Delfin Sarl, the group that owns Del Vecchio's eyewear conglomerate Luxottica, owns a 33.3pc stake.

ArcelorMittal confirmed recent reports that if its takeover with Marcegaglia is successful, the two buyers will increase Ilva's crude steel production to more than 6mn t/yr by 2020, up from 4.8mn t/yr currently, and maintain operations at the three operating Taranto blast furnaces at minimum. Ilva's maximum production capacity is 11mn t/yr.

Luxembourg-based ArcelorMittal said that the two buyers will bring Ilva's environmental performance into line with European environmental standards and legislation through the installation of new technology.

Additionally, ArcelorMittal and Marcegaglia have said they will commit to a major capital expenditure programme to improve Ilva's asset capabilities, productivity levels and health and safety performance, as well as introduce new steel grade to increase the proportion of high value-added products in Ilva's product mix.

Market participants have expressed concern that Ilva's financial difficulties will make it impossible for any buyer to reverse the company's fortunes, with one source estimating in January that Ilva was making losses of around €15mn/month ($16.7mn/month).

But ArcelorMittal Europe Flat Products chief executive Geert van Poelvoorde said today: "We have carried out extensive due diligence and are satisfied that with targeted investments and a robust plan the plant can be successfully turned around."