World's biggest steel producer ArcelorMittal on Monday said it has inked a pact with Brazil's Gerdau to sell their 50% stakes in US-based Gallatin for $770 million, as part of its strategy to divest non-core assets.
"ArcelorMittal and Gerdau jointly announced today (Monday) that they have entered into a definitive transaction agreement to sell their respective 50% interests in Gallatin Steel Company (Gallatin) to Nucor Corporation for a total cash consideration of $770 million, subject to customary closing adjustments," the steel giant said in a statement.
Gallatin Steel is a joint venture between ArcelorMittal and Gerdau. Gallatin is a flat rolled mini-mill located in Gallatin County, Kentucky, USA that melts scrap, pig iron and hot briquetted iron from various sources, and processes the material to produce flat rolled steel.
It produces a wide range of steels from low to high carbon grades with an annual capacity of around 1.8 million tonnes.
"The sale of Gallatin unlocks substantial value for ArcelorMittal's shareholders and is consistent with ArcelorMittal's stated strategy of selective divestment of non-core assets. I would like to thank all our employees in Gallatin for their hard work and commitment during the years that we have co-owned this mill," said Aditya Mittal, CFO of ArcelorMittal.
"The decision to sell Gallatin was made in order for Gerdau to focus on its core assets in North America. On behalf of Gerdau's management, I would like to express gratitude to the whole team at Gallatin for their efforts in making Gallatin a great company", said Gerdau's chief executive officer (CEO) Andre B Gerdau Johannpeter.
The company said completion of the sale is subject to customary closing conditions, including expiration of the Hart Scott Rodino Antitrust Improvements Act waiting period. The closing of the transaction is not subject to any financing conditions and is expected to be realised by the end of 2014.
Gerdau is the leading manufacturer of long steel in the Americas and a major global supplier of special long steels.
The company recently began operations in two new Brazilian markets, with the production of flat steel and the expansion of its iron mining activities. Gerdau has industrial operations in 14 countries - the Americas, Europe and Asia - with a combined installed capacity of more than 25 million tonnes of steel a year. It is also Latin America's biggest recycler and, worldwide, transforms millions of tons of scrap metal into steel every year.
ArcelorMittal is the world's leading steel and mining company, with a presence in more than 60 countries and an industrial footprint in over 20 countries.