Arcelor-Mittal announced yesterday it was purchasing Mexico's Sicartsa, maker of long-steel products such as bars and wires used in buildings. The deal was reported to total $1.4 billion - $900 million for the company as well as $540 million in debt. With 176 million tons of iron-ore reserves, Arcelor-Mittal has enough to keep its newly acquired mills operating for 30 years at current rates of 2.7 million tons a year, making it Mexico's biggest steel producer. The Wall Street Journal believes the deal signals a new strategy for the newly-merged Arcelor-Mittal to dominate each market it serves while grabbing precious raw materials on the cheap. It will also provide a jumping off point for the company to cater to the Mexican and southwestern U.S.'s steel needs.
• Sources: Reuters, MarketWatch, Bloomberg, WSJ
• Related commentary: ArcelorMittal - A Sustainable Global Steel Titan?, Big Steel Mergers -- It's About Pricing Power (MT, BHP, RTP), Will Another Iron-ore Price Hike Stop Surging Steel Stocks?, Oregon Steel Mills Buyout Sends U.S. Steel Stocks Skyward
• Potentially impacted stocks and ETFs: Mittal Steel Company N.V. (NYSE:MT). Competitors: United States Steel Corporation (NYSE:X). ETFs: Market Vectors Steel ETF (NYSEARCA:SLX)
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