ArcelorMittal (MT) Receives EC's Approval For Ilva Buyout

ArcelorMittal (NYSE:MT) has received merger clearance from the European Commission (“EC”) for AM Investco Italy Srl’s planned acquisition of Ilva S.p.A, marking a major milestone and a key step toward the deal closure.

EC’s move follows the conclusion of its Phase II probe into the proposed buyout of Ilva. The merger clearance has been granted on the basis that ArcelorMittal has committed to dispose of assets in Romania, Macedonia, Italy, Luxembourg, Belgium and Czech Republic.

In June 2017, ArcelorMittal and its partner Marcegaglia announced that AM Investco has reached a binding agreement with the Italian government regarding the lease and obligation to purchase Ilva. The transaction details of AM Investco’s plans for Ilva include a purchase price of €1.8 billion, with annual leasing costs of €180 million, which will be paid in quarterly installments.

ArcelorMittal believes that Ilva will prove to be a good investment without compromising the strength of its balance sheet. It will provide an opportunity to expand leadership and product offering in Italy, the second-largest steel producing and consuming market in Europe.

ArcelorMittal’s shares have moved up 6.1% over the past three months, outperforming the industry’s 4.7% gain.

ArcelorMittal remains focused on implementing strategic measures under its Action 2020 plan to drive profitability. The plan is a strategic roadmap for each of the company’s key segments, which targets a structural EBITDA improvement of about $3 billion. The program contributed $0.6 billion to EBITDA in 2017 with cumulative benefit of $1.5 billion.

ArcelorMittal is also expanding its global portfolio of automotive steels by launching a new generation of advanced high strength steels, in line with the Action 2020 program.

The company has also announced a three-year investment program of roughly $1 billion at its Mexican operations, which is geared toward improving the quality and efficiency of operations. It will allow ArcelorMittal Mexico to produce 2.5 million tons of flat rolled steel that will be supplied to customers of domestic non-auto and general industry.

Zacks Rank & Other Stocks to Consider

ArcelorMittal currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks worth considering in the basic materials space are Steel Dynamics, Inc. (NASDAQ:STLD) , Huntsman Corporation (NYSE:HUN) and Kronos Worldwide Inc. (NYSE:KRO) , each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Steel Dynamics has an expected long-term earnings growth rate of 12%. Its shares have rallied 32.5% over a year.

Huntsman has an expected long-term earnings growth rate of 8.3%. Its shares have moved up 17% over a year.

Kronos has an expected long-term earnings growth rate of 5%. Its shares have surged 31.3% over a year.

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