Mittal’s Aperam ups bid for Outokumpu’s Italian steel mill – by Silvia Antonioli (Reuters U.K.- November 21, 2013)

LONDON – (Reuters) – A consortium led by stainless steelmaker Aperam APAM.L has raised its bid for Italian steel plant Terni that its competitor Outokumpu has to sell, a deal that would reshape the European stainless steel industry.

The consortium, including Italian steelmakers Arvedi and Marcegaglia, submitted the higher bid last week – because Outokumpu sees all bids so far as too low – and it is valid until Friday, two sources with knowledge of the situation said.

Finland’s Outokumpu (OUT1V.HE) agreed to sell the Acciai Speciali Terni plant more than a year ago to gain approval for its purchase of ThyssenKrupp’s (TKAG.DE) Inoxum unit.

The plant – considered one of Europe’s most advanced stainless steel mills – is of strategic importance due to its vicinity to steel buyers in Italy, a major steel market, but its profitability has been hard hit by a slump in the steel market.

Loss-making Outokumpu faces a massive writedown on Terni, which is valued at more than 560 million euros ($750 million) on its book but is expected to sell for a fraction of that.

“For Outokumpu all that matters at the moment is getting their debt down but the sale of this plant now will not strengthen their balance sheet considerably. If it strengthens it somewhat they are already lucky,” an industry expert said.

“But that plant is a champ in the strategic Italian market and Aperam could get it for a very attractive price.”

Besides the Aperam consortium, other parties interested in the plant are Taiwanese steelmaker Yieh United Steel Corp (YUSCO) (9957.TWO) and U.S. private equity funds Apollo and JPMorgan’s One Equity Partners.

Outokumpu said it hopes to complete the sale this year but declined to comment further. Aperam, spun off by ArcelorMittal (ISPA.AS) in 2011 with the Mittal family retaining the biggest stake, said it was still interested in the plant but did not give any further details.

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