Corporate communication manager Paul Weigh says there is no truth to the rumour.
“We firmly deny this rumour and it couldn’t be further from the truth,” says Weigh.
At the time, local daily Business Report said that Mittal may sell its local unit as part of the deal.
Quoting AFP, the paper said that Mittal may divest from activities in Algeria, North America, Serbia and South Africa.
Quoting a source close to Arcelor, the French wire said: “Mittal appears ready to make an effort, in particular regarding the divestment of underproducing assets.” But Mittal Steel said in a statement: “Mittal Steel remains committed to South Africa and Mittal Steel South Africa is a flagship subsidiary in the Mittal Steel group.” Mittal Steel South Africa traces its origins back to the State-owned Iscor and is 52%-owned by Mittal Steel.
According to the steel giant’s 2005 full-year results presentations, South Africa is seen as an area of growth.
Over the next five years, it sees steel consumption per capita picking up in countries such as South Africa, India, Bosnia and Mexico.
In the fourth quarter of 2005, South Africa accounted for 11% of steel shipments, outweighing other countries such as Poland (9%), Romania (8%), the Czech Republic (5%), Kazakhstan (6%), and the Ukraine at 10%.
In fact, in this period, South Africa’s contribution outweighed all other developing country’s contributions.
An analyst, who asked not to be named, said that it did not make sense for Mittal to exit South Africa.
He said that selling the local unit to raise cash was not a likely scenario as it was “too small in the great scheme of things”.
He also said that the local opera- tions are a profitable part of the conglomerate and it was likely that the new group would continue with “business as usual”.
However, South Africa is not without its own challenges, with Mittal Steel South Africa facing growing antagonism towards its pricing policies and its market dominance.
The manufacturer is also currently the subject of a Competition Tribunal hearing into an allegation of excessive pricing. The complaint was laid by miners such as Harmony Gold and DRDGold.
Its relative size may also stand in the way of any further consolidation moves, and has forced it to refrain from making a bid for Highveld Steel & Vanadium, which Anglo American has put up for sale.
Its €25,6-billion takeover of Arcelor will create a world giant three times larger than its nearest rival.
Reuters, at the time, reported that Arcelor had bowed to Mittal Steel’s takeover bid on Sunday.
The five-month takeover battle came to an end when Arcelor’s directors unanimously accepted Mittal’s improved cash-and-stock offer after a nine-hour board meeting.
The Mittal family will hold 43,4% of the company.
The new company, which will be called Arcelor-Mittal and will be based in Luxembourg, will create synergies of $1,6-billion through purchasing, marketing and manufacturing efficiencies.
Commenting, chairperson Lak-shmi Mittal said: “I am delighted that Mittal Steel and Arcelor have agreed to merge. “This is one of the greatest days in the history of Mittal Steel and a seminal event in the steel industry that will shape its future.
“Arcelor is an exceptional com-pany with world-class assets and highly-regarded management.
“I want to take this opportunity to express my gratitude to all our employees, shareholders, and business partners for their support throughout this process of creating the best steel company in the world.
“This combination is a natural alliance that represents a transformational change towards realising our vision of a more sustainable and stable industry benefiting all stakeholders. “It is a winning combination between our two complementary companies, creating the industry leader that will create significant value for our shareholders.” Mittal will be president, and current chairperson Joseph Kinsch will remain chairperson until he retires next year. No mention was made of the fate of current CEO Guy Dolle.
The combined company will produce about 10% of the world’s steel and have a joint turnover of some €55-billion and a total worldwide staff of 334 000, according to 2005 data, said Reuters.
Mittal has since been quoted as saying the group has its sights set on further acquisitions in emer- ging markets, such as China and India.