ArcelorMittal to Acquire KSS - Analyst Blog
May 03 2011 - 4:45AM
Zacks
Steel giant,
ArcelorMittal (MT) is close to buying
KazStroyServices Ltd (KSS), a Kazakhastan-based
engineering, procurement and construction (EPC) company.
The company has presence in
Kazakhstan, India, Turkmenistan and West Asia and primarily builds
oil and gas pipelines and refineries. ArcelorMittal is buying the
company in its personal capacity.
KSS owns 52.47% stake in India’s
Petron Engineering Construction Limited (PECL), listed on the
Bombay Stock Exchange. It has a market capitalization of around Rs
319 crores. The deal is expected to be finalized and announced in
about a month and after that, there would be an open offer for the
Indian shareholders.
Currently, KSS owns 52.22% stake
through Petron Investments Pvt Ltd and another 0.13% through
KazStroy Engineering (UK) Ltd.
ArcelorMittal is expected to
announce its first-quarter 2011 results on May 11, 2011.
In fourth-quarter 2010,
ArcelorMittal reported diluted net loss of $0.51 per share, much
below the Zacks Consensus Estimate loss of $0.19, attributable to
impairments and some were also related to Aperam.
We believe that steel price
momentum will slow and margin concerns will intensify again as a
result of added supply, weaker seasonal demand, less restocking and
a slowing cost-push. Additionally, ArcelorMittal has acquired a 70%
interest in Baffinland Iron Mines Corp. to bolster its mining
operations with a high-Fe content lump ore project and it recently
spun-off its stainless steel business.
The company has also targeted cost
reduction program to achieve run-rate savings of $5 billion by
2013. ArcelorMittal has the highest leverage to a continued steel
recovery and will benefit the most from rising raw material
prices.
ArcelorMittal competes with other
international steel companies like BaoSteel, POSCO
(PKX), Nippon Steel and Tata Steel.
Currently, ArcelorMittal has a
short-term (1 to 3 months) Zacks #2 Rank (Buy) and a long-term
Outperform recommendation.
KOHLS CORP (KSS): Free Stock Analysis Report
ARCELOR MITTAL (MT): Free Stock Analysis Report
POSCO-ADR (PKX): Free Stock Analysis Report
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