ArcelorMittal consortium to take over troubled Italian steel giant

The Am Investco Italy consortium had won the takeover bid for Europe’s biggest steel plant by defeating the rival consortium AcciaItalia (Steel Italy) led by Indian Jindal South West (JSW) Group.

SEATTLE (Scrap Monster): A consortium led by world’s leading steel producer, ArcelorMittal, has won the bid to take over Italy’s struggling steel producer Ilva. The joint offer of 1.8 billion euro by ArcelorMittal and Marcegaglia group won support of the Industry Ministry. A decree in support of the offer was signed by Italian Industry Minister Carlo Calenda on Monday. Italy’s administration has been trying to sell Ilva since 2015. The deal is subject to final approval by the European Union.

The Am Investco Italy consortium had won the takeover bid for Europe’s biggest steel plant by defeating the rival consortium AcciaItalia (Steel Italy) led by Indian Jindal South West (JSW) Group. There were reports that AcciaItalia had raised its offer late last week. However, Am Investco Italy’s bid offer prevailed. The three special commissioners in charge of Ilva had already recommended Am Investco’s offer. ArcelorMittal and Marcegaglia group have signed a pre-accord with Italian bank Intesa Sanpaolo. Incidentally, ArcelorMittal accounts for 85% of the bid, whereas the balance 15% is represented by Marcegaglia. A part of the 15% stake by Marcegaglia will now be taken over by Intesa Sanpaolo.

According to Italian Industry Ministry, the steel major will invest additional 2.4 billion euros in Ilva steel plant, apart from the purchase price. Out of this, 1.15 billion euros will be earmarked to improve the environmental standards at the plant, whereas the balance will be utilized for technological improvements at the facility. The winning consortium is expected to provide detailed outline of industrial plan and commitments, as part of the process of obtaining new environmental AIA permit. The consortium’s plans for cleaning up the polluted site will have to be examined and ratified by the Environment Ministry. The final transfer of ownership is expected to happen over the next one year, sources said.

Lakshmi Mittal, Chief Executive, ArcelorMittal stated that the company would work in co-operation with all interested parties to ensure that the Ilva steel plant offers stable and sustainable future to employees and communities. The steel output is expected to remain at 6 million tonnes per annum during the clean-up period. By 2024, it plans to raise the output to 8 million tonnes per annum.

However, the takeover plan has raised fears of thousands of job cuts. As per plan, the current 14,220 jobs will be reduced to around 9,900 by 2018. In the next five years after that, the number of jobs will be brought down to 8,500. The consortium will have to reach an agreement with workers unions. Incidentally, union representatives have stated that the deal would leave thousands jobless. According to them, the deal does not meet the needs of workers. Incidentally, hundreds of employees at Ilva’s Genoa site had staged protest Monday demanding Prime Minister Paolo Gentiloni’s urgent intervention on the matter.

Italian court had ordered seizure of the company in 2012, following allegations of harmful toxic emissions from its major plant in Taranto.

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