ArcelorMittal (MT) Closes Strategic 28% Stake Buy in Vallourec

Acquisition Details - ArcelorMittal S.A. has acquired 65,243,206 shares of Vallourec, representing approximately 28.4% equity interest, for a total consideration of approximately €955 million (roughly $1,043 million) at €14.64 per share [1] - The acquisition followed the signing of a Share Purchase Agreement on March 12, 2024, and received necessary approvals from antitrust authorities and foreign investment regulations [1] - Post-acquisition, Genuino Magalhaes Christino and Keith Howell from ArcelorMittal will join Vallourec's board, with Aditya Mittal taking on the role of observer [1] Strategic Intent - ArcelorMittal does not plan to launch a tender offer for the remaining shares of Vallourec in the next six months but will update the market if this changes [2] - The company views Vallourec as a leading producer of high-quality tubular products, particularly in a market segment expected to grow due to emerging clean energy markets [2] - The acquisition is seen as a strategic addition to ArcelorMittal's investment portfolio, with a commitment to support Vallourec's management in enhancing performance [2] Growth Strategy - The acquisition aligns with ArcelorMittal's broader growth strategy, which includes recent acquisitions in Brazil and the U.S. that are yielding strong results [3] - The company is making significant progress on various organic growth projects, many expected to complete this year, which will enhance product capabilities and earnings capacity [3] - ArcelorMittal revised its projection for global steel consumption growth (excluding China) to 2.5-3% for 2024, down from 3-4% [3] Financial Outlook - The company forecasts capital expenditures for 2024 to be between $4.5 billion and $5 billion, with $1.4 billion to $1.5 billion allocated to strategic growth projects [3] - A $1.6 billion investment in working capital made in the first half of 2024 is expected to reverse by year-end, supporting a positive outlook for free cash flow generation [3] - Completion of strategic growth projects is anticipated to lead to structurally higher EBITDA and investable cash flow in the future [3]