Integrated steel and mining company ArcelorMittal has entered a €955m ($1.04bn) deal to acquire a 28.4% equity stake in Vallourec.
The share purchase agreement will see ArcelorMittal buying 65,243,206 shares at €14.64 each from funds managed by Apollo Global Management.
It is set to bolster ArcelorMittal’s presence in the tubular business, with the deal expected to be finalised in the second half of the year, pending regulatory approvals.
Vallourec offers tubular solutions to the energy sector and other demanding industrial applications.
Its product range serves industries such as energy, automotive, and construction.
Vallourec’s annual rolling capacity is 2.2 million tonnes, with 85% centred around low-carbon.
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It has also set targets to reduce its carbon dioxide intensity across scopes 1, 2, and 3 upstream by 30% by 2030 and 35% by 2035, using 2021 as the baseline.
This acquisition marks the culmination of Vallourec’s financial restructuring, which began in 2021 when Apollo Global Management became its reference shareholder.
In 2023, Vallourec registered earnings before interest, taxes, depreciation, and amortisation (EBITDA) of €1.2bn and sales of €5.1bn.
It anticipates that EBITDA from its energy transition business could account for 10%-15% by the end of the decade, driven by the growth potential in hydrogen, geothermal, and carbon capture sectors.
ArcelorMittal has clarified that it does not plan to initiate a tender offer for the remaining shares of Vallourec in the next six months.
ArcelorMittal CEO Aditya Mittal 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 [carbon capture and storage] 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.”
ArcelorMittal posted net income attributable to equity holders of the parent of $919m in 2023, down from $9.3bn in 2022.
