ROTTERDAM, the Netherlands (AFP) - Dutch steel groups Ispat International and LNM Holdings, both run by Indian businessman Lakshmi Mittal, said they had agreed to merge with US International Steel Group to form the world's largest steelmaker.
The new group, named Mittal Steel, will be run by Mittal, an influential Asian entrepreneur who is Britain's eighth richest citizen.
Mittal Steel will become the world leader in terms of steel shipments, far outstripping the current world number one, the European consortium Arcelor, according to its chairman Mittal.
The group will also be the number one steel group in terms of market capitalisation (18.5 billion dollars, 14.5 billion euros) ahead of Japan's Nippon Steel.
For 2004 Mittal Steel expects revenues of over 30 billion dollars and a production capacity of 70 million tonnes annually. The company also expects a pro-forma operating income of 6.8 billion to 7 billion dollars and earnings per share of up to 7.40 dollars per share. The pro forma debt is set at 3.2 billion dollars.
Mittal Steel will have operations in 14 countries including the United States, Canada, Mexico, France, Germany and eastern Europe and employ 165,000 people.
The group will become the biggest steel producer in North America and the number one exporter in China, Mittal said during a conference call with journalists.
"These transactions dramatically change the landscape of the global steel industry," Mittal said.
"This combination represents a significant step forward in the globalisation of the industry," he added.
Mittal Steel will be created in two steps. The Netherlands-based Ispat International, the world's 11th largest steel producer, initially will acquire LNM Holdings, also based here.
Ispat and LNM Holdings already form part of the LNM Group, an international steelmaking association controlled by Mittal. Mittal also has controlling stakes in both Ispat and LNM Holdings and is chairman of both companies. He will become the chairman of Mittal Steel as well.
As part of the deal, LNM and Ispat will issue 525 million new shares, valued at 13.3 billion dollars. The new group will than merge with the US International Steel Group to form Mittal Steel. In total, ISG shareholders will receive 42 dollars per share with the proviso that half of the amount will be in cash and the other half in Mittal Steel shares.
The merger was expected to be finalized by the end of the first quarter of 2005.
The companies involved have already signed a letter of agreement with the United Steelworkers of America and the Independent Steelworkers Union.
The current chairman of ISG, Wilbur Ross, will become a member of the board of directors of Mittal Steel.
The president and chief executive of ISG Rodney Mott will oversee Mittal Steel's combined US operations.
10/25/2004 - 14:44 GMT - AFP