March 2024 | ArcelorMittal has entered into a Share Purchase Agreement, securing a substantial minority ownership amounting to approximately 28.4% in Vallourec, in a transaction valued at roughly €955 million. The acquisition, from Funds managed by Apollo Global Management, Inc., totals around €955 million. The finalization of the transaction is contingent on regulatory approvals and is anticipated to be completed in the latter half of the year.
Having carried out a successful restructuring in recent years, Vallourec presents a compelling opportunity to increase ArcelorMittal’s exposure to the attractive, downstream, value-added tubular market. It is a global leader in premium tubular solutions for energy markets and demanding industrial applications, offering innovative, safe and competitive products for sectors including energy, automotive and construction. 85% of Vallourec’s 2.2 million tonnes of annual rolling capacity is focused around low-carbon, integrated productions hubs in US and Brazil, both of which are important strategic markets for ArcelorMittal.
In 2023 Vallourec reported EBITDA of €1.2 billion on sales of €5.1 billion. It expects EBITDA from the energy transition business to reach between 10 and 15% by 2030, given the growth potential from hydrogen, geothermal and carbon capture.
ArcelorMittal does not intend to launch a tender offer for Vallourec’s remaining shares over the next six months.
Commenting, Aditya Mittal, CEO, ArcelorMittal, said:
“Vallourec is a quality, high added-value tubular business, with established positions of strength in the attractive Brazilian and US markets. As a producer of premium tubular solutions, it has a critical role to play in the energy transition, producing vital products for hydrogen, CCS and geothermal applications, for which demand is expected to grow. It also has a comparatively low carbon footprint with ambitious improvement targets. We look forward to being part of the company’s future.”
Vallourec’s steel making facilities in Brazil and the US have low carbon emissions (North America steel production at 0.290 tCO2 per tonne of steel and Brazil steel production at 0.945 tCO2 per tonne of steel, Scopes 1 and 2 only), with an ambitious roadmap to reduce CO2 intensity (scope 1, 2 and 3 upstream) by 30% in 2030 and 35% in 2035 (vs 2021 baseline).