Severstal to sell US steel plants
RUSSIAN steelmaker Severstal yesterday said it has agreed to sell two US steel plants for $2.325bn (£1.36bn), as it looks to return cash to shareholders and focus on its domestic market.
The sale of the Columbus and Dearborn assets – which mainly make steel for the automotive industry – to US rivals Steel Dynamics and AK Steel Corporation, concludes a strategic review announced back in May.
“It’s not that the US assets are bad; they generate earnings and free cash flow. But it’s a good opportunity to sell them at a fair price,” VTB Capital analyst Vadim Astapovich told CityAM
“These assets have a far lower profit margin compared to Severstal’s Russian business.”
The sales come at a time of escalating political tensions between Russia and the US over Russia’s involvement in the Ukraine crisis.
Severstal, which is controlled by Russian billionaire Alexei Mordashov, may use the proceeds to pay an extra dividend and reduce its debt.
“The sale of Columbus and Dearborn unlocks substantial value to Severstal’s shareholders,” said Mordashov, who is also chief executive. The deal is expected to close by the end of the year.