The world's largest steelmaker Arcelor Mittal today paid $1.44 billion purchase in Mexico of Grupo Villacero for Sicartsa.
Arcelor Mittal, whose own $33 billion merger is not complete, announced it had agreed an enterprise value of $1.439 billion with Grupo Villacero for Sicartsa, an integrated producer on the same site as Mittal Steel Lazaro Cardenas.
The combined 6.7 million tonne operation should generate industrial synergies of $80 million and gains from commercial, sales and administration of $50 million, Arcelor Mittal said.
"With the Mexican market expected to grow by up to 6 percent per year over the next 10 years this is the ideal time to expand our presence in this country," Arcelor Mittal chief financial officer Aditya Mittal said in the statement.
Arcelor Mittal shares in Paris rose to a session high of 31.84 euros, a gain of 2.0 percent, before easing back to 31.60 euros, up 1.2 percent. The Dow Jones Stoxx European Basic Resources index was 0.7 percent higher.
Michael Shillaker, analyst at Credit Suisse, said the deal had three clear positives.
It followed the sale of long product activities in Europe, following competition concerns, showed Arcelor Mittal was still on the acquisition trail even though it had not completed its own integration and made logistic sense as the Mexican plants were on the same site.
The site operated as one prior to privatisation in 1991.