The leading steel maker, ArcelorMittal (MT) announced that it has agreed to acquire a 13.881% stake in ArcelorMittal Ostrava, a.s. from a subsidiary of PPF GROUP N.V., for approximately $404.3 million.
The company said that this investment is consistent with ArcelorMittal’s commitment to be one of the largest foreign investors in Czech Republic. This deal increases ArcelorMittal’s stake in ArcelorMittal Ostrava, a.s. to approximately 96.4%. The final payment for the transaction is expected to be made in 2010.
The steel maker which recently posted its third quarter results said that it noticed the first signs of recovery during the reported quarter. The company saw a 7% sequential improvement in its shipments in the quarter. ArcelorMittal restarted a number of its facilities in response to the improved demand conditions and now expects crude steel capacity utilization of 70% for the fourth quarter. Also, the company has reinitiated selected growth projects in some key emerging markets. The company expects to see a gradual improvement in market conditions through 2010.
In response to the recent uncertain market conditions, the company had implemented cost reduction initiatives and has achieved $2.2 billion of annualized sustainable cost reduction as of the reported quarter. Through its actions, the company has succeeded in offsetting some of the negative impact of weak market conditions. Though the profits were low compared to the previous year, the company witnessed a substantial improvement on a sequential basis.
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