ArcelorMittal to Explore Sale of Construction Business
Construction business could fetch ArcelorMittal about 700 million euros ($773 million) to 800 million euros.
(Bloomberg) -- ArcelorMittal, the world’s biggest steelmaker, is exploring a sale of a downstream construction business as it divests peripheral operations, people familiar with the matter said.
The company is working with advisers to prepare an auction of the division, which makes products including roof paneling, according to the people. The business could fetch about 700 million euros ($771 million) to 800 million euros, the people said, asking not to be identified because the discussions are private.
A sale is likely to kick off in the fourth quarter and could attract interest from both building materials producers and private equity firms, one of the people said. ArcelorMittal jumped as much as 3.3% in Amsterdam on Wednesday, touching the highest since July.
The company announced in August it has the potential to “unlock” $2 billion from its portfolio in the next two years, signaling plans to sell non-core units. Its billionaire chief executive officer, Lakshmi Mittal, said last month that steel demand could be even weaker than previously expected while profits are being hurt by lower prices and higher raw material costs.
A representative for ArcelorMittal declined to comment.
The plan to sell a non-core asset is positive as it “shows renewed focus on reducing net debt to target levels,” said Christian Georges, an analyst at Societe Generale SA. Investors are watching the metric closely because the company has said it would increase dividends after meeting a target for net borrowings of $7 billion, down from $10.2 billion it had as of end-June.
The company said last month it would “prioritize deleveraging,” even amid challenging steel market conditions.
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To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, ;Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin, Megan Durisin
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