ArcelorMittal S.A. (MT) has completed the acquisition of a significant stake in Vallourec, a leading producer of high-quality tubular products. The company acquired 65,243,206 shares, representing approximately 28.4% of Vallourec’s equity, for a total consideration of €955 million (roughly $1,043 million). This follows the signing of a Share Purchase Agreement on March 12, 2024, and subsequent approvals from relevant antitrust authorities and foreign investment regulations.
The shares were acquired from funds managed by Apollo Global Management Inc. at a price of €14.64 per share. As part of the transaction, Genuino Magalhaes Christino, ArcelorMittal’s chief financial officer, will become a director of Vallourec. Keith Howell, chief operating officer of ArcelorMittal USA, will also join the board. Aditya Mittal will serve as an observer, subject to the successful completion of the settlement.
ArcelorMittal has stated that it does not intend to launch a tender offer for the remaining shares of Vallourec over the next six months. However, the company will inform the market if this intention changes.
In its comments on the acquisition, ArcelorMittal highlighted Vallourec’s strong position within a market segment poised for growth, particularly driven by emerging clean energy markets. The company emphasized the strategic value of this stake in Vallourec and expressed its commitment to supporting Vallourec’s management team in enhancing performance.
This acquisition aligns with ArcelorMittal’s broader growth strategy, which includes recent acquisitions in Brazil and the United States that are delivering strong results. The company is also making significant progress on various organic growth projects, many of which are expected to reach completion this year. These initiatives are anticipated to significantly bolster ArcelorMittal’s business by expanding product capabilities, increasing exposure to emerging markets, and enhancing overall earnings capacity.
ArcelorMittal’s stock has declined by 18.9% in the past year, mirroring the industry’s 18.6% fall. During the second-quarter earnings call, the company revised its projection for global steel consumption growth (excluding China) to 2.5-3% for 2024, down from its previous estimate of 3-4%.
ArcelorMittal continues to forecast capital expenditures for 2024 within the range of $4.5-$5 billion, with $1.4-$1.5 billion allocated to strategic growth projects. The company expects a $1.6 billion investment in working capital made in the first half of 2024 to reverse by the year-end, supporting a positive outlook for free cash-flow generation. Completing strategic growth projects is anticipated to lead to structurally higher EBITDA and investable cash flow in the future.
