SEATTLE (Scrap Monster): Outokumpu-Europe’s largest stainless steel producer announced that it has reached an agreement, which will see divestment of majority of its long products business to Marcegaglia Steel Group. This is part of its strategy to focus on its core business of flat stainless steel products.
The transaction covers Long Products’ melting, rod and bar operations in Sheffield, UK; bar operations in Richburg, US; and wire rod mill in Fagersta, Sweden. It must be noted that the Long Products sales had accounted for approximately 8% of the Group’s total sales during the previous year.
The transaction is for a total consideration of EUR 228 million, on a debt and cash free basis. The company will report the Long Products business to be divested as assets held for sale and report it as a discontinued operation in its next Interim report. It would recognize an impairment of around EUR 50 million, based on preliminary assessment. In the half-yearly report, Outokumpu will consider the divestment as a non-adjusting event.
The divestment transaction, to be carried out as a share sale, will be completed by the end of the current year, subject to customary closing conditions and necessary regulatory approvals by the competition authorities. The company does not expect any material gain or loss on the transaction, though the final impacts of it are still evaluated.