Praxair to divest European gases business to allow merger clearance by European Commission
Praxair, Inc. and the Japanese industrial gases manufacturer Taiyo Nippon Sanso Corporation have entered into an agreement to sell the majority of Praxair’s European gases business. The business to be sold generated annual sales of approximately 1.3 billion EUR in 2017. The purchase price of 5 billion EUR will be subject to customary adjustments at closing.
Linde AG and Praxair consider a divestiture of such business to be necessary in order to allow merger clearance of the proposed business combination by the European Commission. This sale is still subject to the completion of the proposed business combination of Linde AG and Praxair, Inc. and regulatory approvals, including by the European Commission.
The receipt of regulatory approvals outstanding in other jurisdictions for the proposed business combination is expected to require that the merger partners will divest further businesses. Linde and Praxair are in discussions with the competent authorities and in negotiations with potential bidders with the objective of completing the business combination in the second half of 2018.
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Tata Steel and thyssenkrupp sign definitive JV agreement to combine European steel operations
Agreement to combine European steel operations in 50/50 joint venture thyssenkrupp Tata Steel
Proposed new company to focus on quality and technology leadership
Expected annual synergies of €400-€500 million plus synergies in capex and working capital optimization confirmed by due diligence
Joint venture creates significant value for both partners
Valuation gap properly reflected in final agreement
Consultation processes with all employee representatives successfully completed
Transaction completion subject to merger control clearance
On Saturday, 30 June 2018, Tata Steel and thyssenkrupp AG signed a definitive agreement to create a new company by combining their European steel businesses in a 50/50 joint venture. This follows the signing of a Memorandum of Understanding in September 2017.
The proposed new company, to be named thyssenkrupp Tata Steel BV, will be positioned as a leading pan European high quality flat steel producer with a strong focus on performance, quality and technology leadership. The joint venture is built on the strong foundations of common value systems and a long heritage in the industry. The transaction is subject to merger control clearance in several jurisdictions, including the European Union. Until closing, thyssenkrupp Steel Europe and Tata Steel in Europe still operate as separate companies and as competitors. Only after closing, thyssenkrupp Steel Europe and Tata Steel in Europe will be integrated as one company.
Natarajan Chandrasekaran, Chairman of Tata Steel, said: “The joint venture will create a strong pan European steel company that is structurally robust and competitive. This is a significant milestone for Tata Steel and we remain fully committed to the long-term interest of the joint venture company. We are confident that this company will create value for all stakeholders.”
The joint venture will be managed as one integrated business through a holding company headquartered in the Amsterdam region of the Netherlands. thyssenkrupp Tata Steel will have a two-tier governance structure that comprises a Supervisory Board and a Management Board each with six members, on which thyssenkrupp and Tata Steel will have equal representation. In the time ahead, thyssenkrupp and Tata Steel will jointly make decisions on the leadership team and their responsibilities. Respective employee representation structures in European countries and a European Works Council (EWC) will be retained. In addition, an Employee Executive Committee (EEC) will be established, in which the Management Board and employee representatives of the joint venture will regularly discuss strategic issues.
Dr. Heinrich Hiesinger, CEO of thyssenkrupp AG, commented: “We will create a highly competitive European steel player – based on a strong industrial logic and strategic rationale. We will secure jobs and contribute to maintaining value chains in European core industries. The joint venture not only addresses the challenges of the European steel industry. It is the only solution to create significant additional value of around 5 billion euros for both thyssenkrupp and Tata Steel due to joint synergies which cannot be realized in a stand-alone scenario. For both partners the stake in the joint venture means a significant lift up of value.”
Synergies and compensation of the valuation gap
Since signing of the Memorandum of Understanding, the different performance development of thyssenkrupp Steel Europe and Tata Steel Europe has led to a valuation gap between the two entities. The definitive agreement includes a proper compensation of this valuation gap: In case of an Initial Public Offering (IPO) of the joint venture thyssenkrupp will receive a higher share of the proceeds, reflecting an economic ratio of 55/45 in favour of thyssenkrupp. Furthermore, thyssenkrupp has the right to exclusively decide on the timing for a potential IPO.
Negotiations with employee representatives and the respective consultation processes have been successfully completed. Taking the different forms of co-determination in the respective countries into account, the basic idea of an integrated company with joint management was secured.
Due diligence and fairness opinions have confirmed the economic viability of the new company and the expected annual recurring synergies of approximately €400 to €500 million. After closing, the synergies will be generated in several areas including procurement, consolidation of overhead and through a better asset utilization. It is expected that there will be opportunities in capital expenditure management and working capital optimisation to realize additional synergies.
At the same time, the future set-up and positioning of the joint venture will enable growth in higher value segments, exceeding industry growth rates. This will be achieved among other measures by redeploying R&D efforts to strengthen the positioning as quality and technology leader.
Leveraging cost synergies will require a rationalization in workforce over the years ahead by up to 4,000 jobs in operations and support functions that is expected to be shared roughly evenly between the two parties. Furthermore, the complete production network is to be reviewed starting in 2020 with the aim of integrating and optimizing the production strategy for the entire joint venture.
With signing of the Joint Venture agreement, thyssenkrupp has paved the way for the refinement of the Group strategy and thus also for the adjustment of financial targets. The Management Board of thyssenkrupp will present the refined strategy to the Supervisory Board in an extraordinary meeting in the week beginning July 9, 2018
Remarks on UK operations
The original Memorandum of Understanding (MOU) – between Tata Steel UK and the UK trade unions – created a framework setting out the principles within which Tata Steel UK and the Steel Committee intended to move forward in pursuit of a sustainable steel business in the UK and to express the good faith intentions of Tata Steel UK and the Steel Committee. Tata Steel will ensure that commitments in the existing MoU are taken into the Joint Venture.
There will be an extension of the Employment Pact to 1 October 2026. Tata Steel made a specific commitment that their ambition is to not have any compulsory redundancies in the UK as a result of the Joint Venture.
The plans to invest in extending the life of Blast Furnace 5 at Tata Steel UK Port Talbot works have been approved and will go ahead this year. This is a critical part of Tata Steel’s UK strategy and will underpin improvements throughout the UK supply chain. The MoU also states that by 2022, the Board of the JV will analyse the company’s UK supply chain to determine the business case for a full relining of Blast Furnace 5.
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Big River Steel CCO Mark Bula to leave the company
Big River Steel’s chief commercial officer, Mark Bula, will be exiting the company to pursue new entrepreneurial opportunities. Mark was a member of the initial development team and was instrumental in the formulation of Big River’s marketing and sales plans that led to the company’s strong performance during its first 15 months of operation.
“All of us at Big River appreciate Mark’s contributions to the launch and early operations of our company and our mill,” said chief executive officer, Dave Stickler. “Knowing that startups are Mark’s true passion, the Big River Steel family wishes Mark every success in his future ventures.
After a record-setting start-up in 2017, Big River Steel continues to focus on producing the high-quality steels its customers are demanding. As the company moves beyond its start-up phase, certain organizational changes have occurred that will position Big River for ongoing success.
Keith Shuttlesworth will become the company’s new chief commercial officer
Keith Shuttlesworth, currently Big River Steel’s general manager of the Carbon Sales Group, will become the company’s new chief commercial officer. Keith joined Big River Steel after an 18-year career at US Steel where he was responsible for some of US Steel’s most important customer relationships.
MPT International had the opportunity to interview Mark Bula last year. In our December 2017 issue, he explained the market prospects and the structure of Big River Steel. The interview was accompanied by a feature article describing the cutting-edge teechnology along the production chain at this new flat steel complex.
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FIMI group announces the acquisition of SELEMA S.r.l. – a renown Italian manufacturer of processing lines for non-ferrous metal strips. In particular, their focus is on aluminium strip with a thickness range from 10 µm to 4 mm for all varieties of alloys produced to this day. Established in 1980, SELEMA has developed, built and put in place lines involving a very high degree of technology, the real technical source of the tension levelling lines and degreasing lines that are still unique for their range and production performance worldwide.
With the takeover of SELEMA’s brands, patents, technical files and references, FIMI group adds a real excellence to its already very wide range of lines. FIMI group strengthens and confirms the strategy of its industrial project that sees quality and technical leadership as its most important targets.
FIMI group with headquarters in Italy is an international supplier of strip/coil processing lines, i.e. finishing lines, tube mills, tube finishing lines and much more.
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AIST Tadeusz Sendzimir Memorial Medal presented to Gianpietro Benedetti
On occasion of AISTech 2018 – the Iron & Steel Technology Conference and Exposition, industry leaders recognized for significant contributions to the global steel industry were honored with prestigious awards.
AIST Tadeusz Sendzimir Memorial Medal was presented to Gianpietro Benedetti, chairman, Danieli & C. Officine Meccaniche S.p.A., Buttrio (UD), Italy. The award presentation took place in Philadelphia on May 8, at the President’s Award Breakfast during the AISTech 2018 event.
Gianpietro Benedetti was awarded in recognition of more than half a century of engineering contributions in the advancement of process equipment for steel manufacturing. Throughout his remarkable career with Danieli, his passion for innovation is evident with more than 90 patents bearing his name, which not only span the entire steel manufacturing process but also have improved plant efficiencies worldwide. Through perseverance, expertise and strategic vision, he has guided the company to achieve global prominence by striving to lead the technological evolution of the steel industry.
Benedetti said, “I and the Danieli team are very honored to receive this award from the association. It is an additional honor to receive the Sendzimir Medal. We admire Mr. Sendzimir for his ideas and innovations.”
This distinguished award was established in 1990 to perpetuate the memory of Dr. Tadeusz Sendzimir’s achievements and engineering contributions in developing process equipment for the steel industry. The award is presented in recognition of an individual who has advanced steelmaking through the invention, development or application of new manufacturing processes or equipment. Past winners of the Sendzimir Memorial Medal have included F. Kenneth Iverson, Irving K. Rossi, and John A. Vallomy.
Danieli chairman is recognized for leadership in technological breakthroughs for steel production
As the chairman of Danieli, Mr. Benedetti’s leadership has been instrumental to a long series of technological breakthroughs for steel production, in particular for minimill operations. Among the many achievements have been the world’s first endless casting-rolling plant for long products, the MI.DA® Micromill process, and the DUE Danieli Universal Endless process for continuous thin-strip casting and rolling.
As noted by Giovanni Arvedi, President of Finarvedi SpA, Mr. Benedetti “followed an original path to technological development revealed in various applications in the long products sector, and also in the flat products sector, more particularly in the thin slab casting area.”
“Through his perseverance, expertise, strategic vision, he has guided the company to achieve global prominence by striving to lead the technological evolution of the steel industry,” Mr. Randy C. Skagen, president of AIST, noted in its citation.
In 1961, Mr. Benedetti earned his diploma as an electrical engineer. That year, he began working in Danieli’s design technical offices, advancing to mechanical project engineer in 1963 and then plant start-up engineer in 1966. He has continued to guide the growth of Danieli, which today employs tens of thousands of people globally, designing, manufacturing, delivering, installing, maintaining and updating metallurgical plants. He is widely recognized by international steelmakers and metal producers alike, having led the business for decades.
In addition to the MI.DA® Micromill, Mr. Benedetti is the holder of other numerous patents for steelmaking machines and processes. Over 80 inventions have been registered under his name.
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ArcelorMittal receives approval for its acquisition of Italian steel company Ilva
ArcelorMittal has announced today that it has been granted merger clearance by the European Commission for AM Investco Italy Srl (AM Investco)’s proposed acquisition of Ilva S.p.A (Ilva).
EC merger clearance follows the conclusion of the Commission’s Phase II investigation into the proposed acquisition of Ilva, and has been granted on the basis that the Company has committed to dispose of assets in Italy, Romania, Macedonia, Czech Republic, Luxembourg and Belgium, as previously announced on 13 April 2018. Approval by the EC is a significant milestone in the transaction to acquire Ilva and represents a major step towards closing the deal, which is now expected to occur as soon as possible.
In April 2018, ArcelorMittal announced that, as part of the ongoing European Commission (‘EC’) review into its acquisition of Ilva, it submitted a proposed divestment package to the EC to address concerns the EC has raised during its review. The proposed divestment package included the following assets:
ArcelorMittal Piombino, the Company’s only galvanised steel plant in Italy,
ArcelorMittal Galati, Romania,
ArcelorMittal Skopje, Macedonia,
ArcelorMittal Ostrava, Czech Republic,
ArcelorMittal Dudelange, Luxembourg,
Hot dipped galvanising lines 4 and 5 in Flemalle; hot-rolled pickling, cold rolling and tin packaging lines in Tilleur, all of which are in Liège, Belgium.
Any sales would be conditional upon completion of ArcelorMittal’s acquisition of Ilva.
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Quick commissioning of AOD converters after revamp at Columbus Stainless
Columbus Stainless (Pty) Ltd. in Middelburg, South Africa belongs to the Acerinox group of companies and is the only manufacturer of stainless steel on the African continent. Here SMS group has successfully supplied and installed a torque retainer system for the two 100-ton AOD converters. The aim of the revamp at their steelmaking plant – to reduce the force on the gearbox during the AOD converter refining process that had been causing uncontrolled vibrations and damage to the bull gear, bearings and foundation of the converter drive – has been fully achieved. The ccompany awarded the final acceptance certificate following a very short revamp and successful re-commissioning.
SMS group supplied the torque retainer made in Germany as a compact electro-hydraulic unit. Engineering and erection supervision were also included in the scope of supply. The revamp took place during a scheduled shutdown. The converters resumed operation and were running at full production capacity at an interval of two days. The first converter reached the guaranteed values three days after hot commissioning, while the second converter had already attained the guaranteed values after only one day. Both, cold and hot commissioning were completed jointly with the customer. The good cooperation and high commitment of the teams from Columbus and SMS group made this success possible.
Gus Schepers, Project Manager Engineering Projects, Columbus, is completely satisfied: “We rely on SMS group technology. The torque retainer from SMS group is an innovative target-oriented solution consisting of tried and tested components, which means the whole system is very easy to maintain. Given the reduced maintenance costs, we project a very good return on investment.”
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Chinese Chengde Jianlong Steel to upgrade bar mill
The Chinese steel manufacturer Chengde Jianlong has placed an order with Friedrich KOCKS GmbH & Co KG, Hilden, Germany, for a Reducing & Sizing Block (RSB®) 370++/4 in 5.0 design. This modernisation project marks Chengde Jianlong’s entry into the market for specialty bar quality (SBQ) products. The company decided to convert the existing bar mill into a state-of-the-art SBQ mill. Along with the implementation of the RSB®, Chengde Jianlong plans to enhance the furnace capacity of the mill as well as to install new shears and 2-high stands in H/V arrangement and to revamp the finishing area for quality steel.
The KOCKS RSB® will be located behind a continuous roughing and intermediate mill consisting of 20 stands in H/V arrangement and will produce special quality bars (SBQ) within a dimension of Ø 20.0 to 100.0 mm. Furthermore, Chengde Jianlong is going to implement the thermomechanical rolling process (TMR) and has made arrangements for the relevant equipment. Because of its consistently excellent deformation characteristics and the low temperature increase due to high efficiency, the RSB® 5.0 is ideally suited for this process. The planned measures will significantly increase the profitability of the rolling mill and allow Chengde Jianlong to meet todays and future market demands.
The commissioning of the modernized bar mill is scheduled for the start of 2019.
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Schmolz + Bickenbach group not to be affected by the U.S sanctions against Russian targets
Schmolz + Bickenbach, a global leader in special long steel, expects not to be materially affected by the sanctions imposed by the US government on its shareholder Viktor F. Vekselberg and his Renova Holding. Viktor F. Vekselberg holds substantially less than 50% of the total capital of Schmolz + Bickenbach through his investment companies. As a result and given the composition of its shareholder basis, Schmolz + Bickenbach does not consider itself a Specially Designated National (SDN) under Executive Order 13662 of the US Office of Foreign Assets Control (OFAC). Based on current knowledge, Schmolz + Bickenbach does not expect the sanctions to have a material impact on its business, neither in the United States of America nor in other parts of the world.
On April 6, 2018, the U.S. Department of the Treasury’s (“Treasury”) Office of Foreign Assets Control (“OFAC”), in consultation with the U.S. Department of State, designated three dozen Russian “oligarchs,” government officials, and related entities as specially designated nationals (“SDNs”). This list of designated Russian persons and entities include Viktor F. Vekselberg and also Renova Group. As with all SDN designations, all assets within U.S. jurisdiction of the designated persons and entities are blocked and transactions within U.S. jurisdiction involving these persons and entities are prohibited. Under OFAC’s 50% Rule, the prohibitions noted above also apply to entities, including U.S. entities, owned 50 percent or more by one or more blocked persons.
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JSW Steel to invest US$ 500 million for the expansion of the steel milll in Baytown, Texas/USA
Texas Governor Greg Abbott signed a Memorandum of Cooperation with JSW Steel to develop and augment the steel industry in Texas. JSW Steel (USA) Inc. has agreed to consider an investment of US$500 million in phases in developing its steel manufacturing infrastructure in Baytown, Texas. This investment will be used to expand the company’s Plate & Pipe Mill unit. A Texas Enterprise Fund (TEF) grant offer of US$3.4 million has been extended to JSW Steel (USA) Inc. The company intends to create a fully integrated steel complex that will bring precision manufacturing of high quality steel plate and pipe to Texas, USA.
“JSW’s motto is ‘Better Everyday,’ and that’s the same approach we take in Texas,” said Governor Abbott. “The US$500 million investment from JSW Steel to expand its operations in Texas shows what we can achieve when we work to be better every single day. Made in Texas is a powerful label, and I thank JSW for investing in our great state. We look forward to forging an even stronger partnership and continuing economic and job growth in the Lone Star State.”
“The Memorandum signed by Greg Abbott and JSW USA is part of our long term strategy to enhance our U.S. footprint,” said Mr. Parth Jindal of JSW Group. “It reiterates our commitment to stay invested and grow in the U.S. market. It also provides JSW USA an opportunity to participate in USA’s infrastructure development and job creation priorities. Access to natural gas at extremely economical prices and the abundant availability of scrap steel in Texas make conditions very conducive for manufacturing through the Electric Arc Furnace route. ”
JSW USA operates one of the widest steel plate & pipe mills in North America. Strategically located in Baytown, Texas the unit services the needs of the energy, petrochemicals, defense and other heavy equipment industries in USA who need high quality carbon plate.
About JSW Steel:
JSW Steel (with headquarters in India) is a part of the diversified US$ 12 billion JSW Group, which has a presence in Steel, Energy, Infrastructure, Cement, Ventures and Sports. JSW Steel is the leading integrated steel company in India with an installed steel-making capacity of 18 MTPA. JSW Steel’s plant at Vijayanagar in Karnataka, is the largest single location steel producing facility in the country with a capacity of 12 MTPA. JSW Steel (USA) Inc is a subsidiary of JSW Steel Ltd.
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