Tuesday, October 26, 2004
The steelmaker is being purchased by a Dutch company for $4.5 billion.
CLEVELAND (AP) -- International Steel Group Inc. saved the jobs of thousands of U.S. steelworkers when it was formed two years ago. Analysts say its sale this week to a Dutch steelmaker should benefit workers again by providing job security.
Immediately after the deal announced Monday, ISG managers sought to let 12,000 employees in eight states know that its $4.5 billion sale to Lakshmi N. Mittal could mean more work, not another round of industry job cuts.
"We're looking for opportunities to increase capacity," said ISG President Rodney Mott, who will lead the combined U.S. operations of the company.
Mott said no plant in North America would be targeted for cutbacks or shutdown. The company's suburban Richfield headquarters will become the headquarters for Mittal's North American operations.
The takeover and the consolidation of two Mittal-controlled companies also announced on Monday will create a global metals mammoth with anticipated 2004 sales of $31.8 billion, 70 million tons of steel production capacity and 165,000 employees, rivaling the world's largest steel and mining conglomerates.
The takeover of ISG and the consolidation of two Mittal-controlled companies -- Ispat International NV and LNM Holdings NV -- will create a metals giant based in Rotterdam, Holland, under the name Mittal Steel Co. NV.
ISG was formed in 2002 after New York buyout firm WL Ross & amp; Co. purchased LTV Corp.'s remnants. The company has grown into one of the biggest U.S. steel producers by acquiring money-losing mills out of bankruptcy and making them more efficient.
Its acquisitions include Acme Steel, Pennsylvania's Bethlehem Steel, Georgetown Steel and Weirton Steel, which it bought in May for $253 million.
Mittal, a native of India who lives in London, has spent years acquiring steelmaking plants in locations ranging from the Czech Republic to South Africa to Mexico, much like ISG chairman Wilbur L. Ross Jr. Mittal was ranked No. 62 in the last rankings of the world's billionaires by Forbes, with an estimated fortune of $6.2 billion.
Analyst Charles Bradford of Bradford Research said ISG's sale would provide stability for workers who have had years of uncertainty as steel companies went bankrupt.
"Worldwide, it diversifies the business," Bradford said. "They're not as much subject to the whims of the U.S. market."
Mark Glyptis, president of the Independent Steelworkers Union, said the 2,100 workers at ISG's division in Weirton, W.Va., aren't even through adjusting to the last sale.
He sees positive aspects of ISG's sale, which he believes gives Weirton yet another opportunity for growth. It also helps stabilize the industry overall and will help ISG weather coke and coal shortages, he said.
Analyst Brian Rayle of FTN Midwest Research said ISG workers will have more stability as part of Mittal, but the deal won't necessarily translate into more business and plant expansions.
The takeover of ISG must be approved by regulators. Mittal said he does not plan layoffs.
Under the deal, Rotterdam-based Ispat International NV -- in which the Mittal family has a majority stake -- will issue $13.3 billion of shares to buy another Mittal family company, LNM Holdings NV. Then, that company would pay $21 in cash and about $21 a share in stock for each share of ISG.
Mittal Steel will have a particular advantage in the United States, where it will control about 40 percent of the flat-rolled steel market, said analyst Chris Olin of Longbow Research.