ArcelorMittal said to be eyeing US Steel for a takeover
19 Aug 2010
ArcelorMittal, the world's largest steel maker is said to be sizing up US Steel for a potential takeover, sending US Steel, the largest steelmaker in the US stock go up by 6.2 per cent in yesterday's trading.
Pittsburgh-based US Steel rose by $2.93, to $50.25 at the New York Stock Exchange in yesterday afternoon trading after Benzinga, a trading blog website, reported that ArcelorMittal is likely to offer $80 a share.
Both companies refused to comment to Benzinga on the market rumour.
But analysts quickly dismissed the notion that the Luxemburg-based ArcelorMittal would be keen to buy US Steel, as the steel manufacturing giant is focusing on building plants in emerging markets like India as well as ramping up its iron ore production.
Moreover, the US steel industry is just about recovering from the global recession. Until July 2009, the US steel industry was enjoying a boom, fuelled by the high demand for steel from China's Olympics boom that led to unprecedented profit levels for steel companies. As a result shares of US Steel traded at almost $192 a share compared to $50.25 yesterday.
In 2008-2009, ArcelorMittal and US Steel had to resort to massive layoffs, idle plants and had to deal with strikes called by the union members of the United Steelworkers demanding higher wages and better health benefits.
Moreover, a merger between the largest and the second largest flat-rolled steel producers in the US would not pass regulators scrutiny unless huge disinvestment of assets are made, which would defeat the purpose of an acquisition, say analysts.
