Oct 25 2004
Ispat International N.V. today announced that it has agreed to acquire LNM Holdings N.V. Following completion of the transaction, the company will be renamed Mittal Steel Company N.V. Simultaneously, Ispat International and International Steel Group Inc. announced today that their Boards of Directors have unanimously approved a definitive agreement under which Ispat International and ISG will merge. The combined Mittal Steel will be the largest and most global steel company in the world and will be listed on the New York Stock Exchange and Euronext Amsterdam.
LNM Holdings is one of the world’s largest and most profitable steel companies and also has substantial mining assets. Revenues were $9.9 billion and operating income was $3.2 billion in the first nine months of 2004. The company has annual total raw steel production capacity of over 32 million tons and owns significant mining assets, annually producing approximately 18 million metric tonnes of iron ore, 13 million metric tonnes of coke and 12 million metric tonnes of coal. LNM Holdings believes it has opportunities to achieve additional growth and cost reductions, particularly at recent acquisitions. For 2004, the company expects steel shipments of approximately 26 million tons and revenues of approximately $14.5 billion.
Under the terms of the agreement with LNM Holdings, Ispat International will issue 525 million new shares, valued at $13.3 billion at Friday’s closing share price on the NYSE, to the shareholder of LNM Holdings. The new shares will comprise approximately 140 million class A shares and approximately 385 million class B shares, which is in the same proportion as the Ispat International shares currently held by LNM Holdings’ controlling shareholder.
Under the terms of the agreement with ISG, ISG shareholders will receive $21.00 per share in cash and a number of Mittal Steel shares equal to $21.00 divided by the average closing price of Mittal Steel for the 20 trading days prior to closing, up to a maximum of 0.6087 shares and a minimum of 0.4793 shares. The value in the merger would be $42.00 per ISG share, or $4.5 billion in the aggregate if the average price of Mittal Steel shares for the 20 trading days prior to the merger is between $34.50 and $43.81 per share.
ISG shareholders will be able to elect between cash and Mittal Steel shares, subject to pro ration such that 50% of the total consideration will be in cash and 50% will be in Mittal Steel shares. The closing prices of Ispat International and ISG shares on Friday, October 22, 2004 on the NYSE were $25.34 and $29.68, respectively.
The companies have signed a Letter of Agreement with the United Steelworkers of America and the Independent Steelworkers Union.
Upon completion of both transactions, Mittal Steel will be the largest and among the most profitable steel companies in the world.
Mittal Steel will have operations in 14 countries on four continents and 165,000 employees.
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