ArcelorMittal South Africa in advanced talks for potential deal, shares spike
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ArcelorMittal South Africa said on Thursday it was in advanced talks with the state-owned Industrial Development Corporation (IDC) that could lead to a potential transaction, pushing its shares up nearly 10%.
The loss-making South African unit of global steelmaker ArcelorMittal has been under pressure from weak local demand, high electricity costs, competition from domestic scrap-metal recycling mini-mills, and imports from China.
The company mothballed its long-steel plants last year as it sought to stem losses. It said in a statement that its parent company and the IDC “are engaged in advanced discussions to find a sustainable solution based on a non-binding term sheet regarding a potential transaction”.
The steelmaker did not provide details of the potential deal, and the IDC was not immediately available to comment. Bloomberg reported on Wednesday that the IDC, ArcelorMittal South Africa’s second-largest shareholder with an 8.2% stake, had resumed talks to acquire the business after negotiations stalled last year over valuation.
The IDC has provided 2.6 billion rand ($160.79 million) in loans over the past two years to help ArcelorMittal South Africa remain afloat, according to the company’s disclosure.
