AP News, March 21st, 2007
Esmark Inc., a privately held steelmaker based near Chicago, has "expressed interest" to Mittal Steel Co. in buying its Sparrows Point mill near Baltimore, Esmark President Craig T. Bouchard said Wednesday.
Bouchard declined to discuss what his company might pay for the mill, which Mittal must sell to settle antitrust issues raised by its proposed $33 billion acquisition of Arcelor SA of Luxembourg.
"We have expressed interest to Mittal and believe there is a good strategic fit for Esmark," Bouchard wrote in an e-mail to The Associated Press.
Mittal spokesman Dave Allen said he knew nothing about the development and that his company probably wouldn't comment on any Sparrows Point sale until after a deal is made.
Esmark, based in Chicago Heights, Ill., said in February that it would consider bidding on Sparrows Point if it could find a partner that Bouchard characterized as "a top-tier player in the global market with access to raw materials."
Bouchard said Wednesday that Esmark doesn't have such a partner, but would consider taking one if it succeeds in buying the mill.
The U.S. Justice Department ordered Mittal on Feb. 20 to sell Sparrows Point by May 21, with the possibility of a 60-day extension, to settle antitrust issues raised by Mittal's pending deal for Arcelor. It said the sale would preserve competition in production of tin-plated steel, which is used to make cans for food, aerosol sprays and paint.
Dutch-based Mittal's purchase of Arcelor, which would create the world's largest steel company, cannot proceed without divestment of Sparrows Point, the Justice Department said.
Steel analyst Scott Burns, who follows Mittal for Morningstar Inc. in Chicago, estimated that Sparrows Point would fetch $875 million to $1 billion, based on its production and the fire-sale nature of the forced divestment.
Industry observers have expected the mill to attract foreign bidders. Sparrows Point, with 2,400 workers, is the only U.S. integrated steel mill with direct ocean access, making it attractive to foreign companies. Integrated plants can perform all the steps for turning ore into finished shapes.
Burns said an Esmark partnership with a foreign company would make sense because Esmark lacks a steady source of raw material, while many overseas steel producers own mines and could ship ore or pig iron to Sparrows Point to be made into steel.
He said he wasn't surprised that no other bidders have surfaced publicly yet. "It does take time to get people in there, look at the facility, kick the tires, look at the books, that sort of thing," Burns said.
Bill Keegan, an Esmark spokesman in Chicago, said a confidentiality agreement prevented Esmark from divulging details about its dealings with Mittal, such as a potential price for the mill and whether the expression of interest amounts to a formal bid.
The Sparrows Point plant produces steel slabs, hot-rolled sheets, cold-rolled sheets, galvanized sheets, tin-mill products and semifinished steel for the construction industry and appliance and container manufacturers. It can make up to 3.9 million tons of raw steel and 500,000 tons of tin products annually.
Sparrows Point was operated for years by Bethlehem Steel Corp., which went bankrupt and sold its assets to International Steel Group, backed by investor Wilbur Ross, in 2003. Ross sold the mill to Mittal in 2005.
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On the Net:
Mittal Steel Co.: http://www.mittalsteel.com
Esmark Inc.: http://www.esmark.com
