14:22 24-10-2014
MAIN Russian
About us On-line subscription
KazakhstanTajikistanUzbekistanKyrgyzstanTurkmenistanWorld
POLITICSBUSINESSINCIDENTSSOCIETYCULTURESPORTANALYSISSCIENCE
Russian steelmaker Severstal sells Michigan plants to U.S. buyers for $2.3bln

Bishkek (AKIpress) - Russia's Severstal said on Monday it had agreed to sell its two U.S. steel plants for $2.3 billion, withdrawing from the U.S. market at a time of rising tension between Russia and the West and turning its focus to its domestic business, The Moscow Times reports. 

The company said it would sell subsidiaries Severstal Columbus in Mississippi to Steel Dynamics and Severstal Dearborn in Michigan to AK Steel Corporation, sales that could allow the steelmaker to pay an extra dividend and reduce debt.

Severstal, Russia's second-biggest steel producer, said in May that it was considering a range of strategic options for its plants in Mississippi and Michigan, which produce steel products mainly for the automotive sector, having earlier divested steel plants in Maryland, Ohio and West Virginia.

The sale comes as tensions between Russia and the West grow over Moscow's involvement in the Ukraine crisis, which has already resulted in a series of sanctions against Russian companies and individuals and may lead to further sanctions.

Severstal, controlled by Russian billionaire Alexei Mordashov, said that politics did not influence its decision to sell its U.S. businesses but some analysts think the situation may have weighed on the final decision and the timing of the sale.

"The political sentiment could have pushed them to do it because it is safer for them to stay away from the U.S. market," said a London-based analyst, who declined to be named due to the sensitivity of the subject.

Severstal North America made up about 30 percent of the group's revenue.

The Russian steelmaker embarked on a series of international acquisitions in the early 2000s, near the peak of the cycle for steel and commodities. In the last couple of years, however, its focus has switched from international growth to its higher margin domestic Russian steel market.

Large steelmakers, including ArcelorMittal, Tata Steel and ThyssenKrupp, have been cutting production, jobs and idling or selling plants in the last few years in response to oversupply, weaker steel prices and sluggish demand.

"The Russian domestic business is more profitable than other parts of the business and that's why other parts, such as the U.S. branch, have lost some their appeal," said Credit Suisse analyst Semyon Mironov. "On top of that the U.S. part of the business has always traded at higher valuations that the Russian part so, from the shareholders perspective, if you can get a better price because of the geography, why not sell it."

Some analysts, however, say selling assets in the United States, a market that they see recovering in the next few years, is a questionable strategy.

"The sale has been talked about for quite a while but these assets are in pretty good shape, they are free-cash-flow positive so there was no rush for a sale," said VTB Capital analyst Vadim Astapovich.

"The sale will improve their total margin because the U.S. assets are lower margin than the Russian ones but every penny counts and these assets are still money making."


Twitterfacebookprint
17:29 21.07.2014
LATEST NEWS
14:14 Significant investments required for modernization of airports – PM Otorbayev14:10 International Association of Epic Manas researchers opens in Kyrgyzstan13:58 China launches experimental moon orbiter13:53 Australian-British company plans to expand copper exploration in Uzbekistan13:42 Kyrgyz Ambassador presents his credentials to Turkish Foreign Ministry13:35 Kazakhstan to award 100 licenses for geological survey work12:34 Kazakhstan joins Asian Infrastructure Investment Bank with other 21 nations12:30 Turkmen horse riders win Grand Prize of International Circus Festival in Italy12:24 Bishkek combined heat and power plant obtains ADB loan to repay debts to coal suppliers12:24 China, 21 other countries initiate new Asian bank12:18 Turkmen President says that docking of Turkmen-Iranian section of railway Kazakhstan-Turkmenistan-Iran important step in formation of Eurasia Communications12:16 Newly opened school in Batken region receives computers from President Atambayev12:02 Rehabilitation of Bishkek combined heat and power plant to finish by autumn 201711:57 Kazakhstan wants more UN presence in country – Foreign Minister11:57 WHO highly regards efforts of Tajikistan in health care development11:51 None of laboratories in Kyrgyzstan undergo national veterinary accreditation11:39 Kyrgyz Energy Ministry plans to resolve electricity import issue until November 1011:35 Turkmenistan to increase supply of electricity to Iran11:29 Heating to be provided in Bishkek since Oct 2711:26 1.057 million tons of coal to be supplied to Bishkek combined heat and power plant
Astana
+1° C
Ashgabat
+26° C
Bishkek
+15° C
Dushanbe
+20° C
Tashkent
+20° C
exchange rates
 
71.00
56.08
9.04
1.35
228.98
180.87
29.56
4.35
6.33
4.99
0.78
0.12
3084.28
2367.40
385.74
61.13
3.61
2.85
0.47
0.07

© AKIpress News Agency - 2001-2014
Use of the AKIpress.com materials must be accompanied by a hyperlink to www.akipress.com
Our address:
Moskovskaya str. 189, Bishkek, the Kyrgyz Republic
e-mail: english@akipress.org, akipressenglish@gmail.com;
Tel/Fax: +996(312)90-07-75