Mittal to buy AK Steel? or will antitrust worries stop it?
Shares of Ohio-based AK Steel Holding Corp. leaped to $39 Tuesday after the Financial Times's Alphaville website reported that Arcelor Mittal, the world's largest steelmaker, was considering buying the company. The Wall Street Journal says a Mittal bid is unlikely, however, since the combination would ring antitrust bells in the U.S., particularly with regard to the manufacture of auto quality steel. Alphaville's unsourced report claimed a deal could value AK at up to $40/share, or about $4.5 billion. AK Steel is a manufacturer of flat-rolled carbon steel and stainless and electrical steel used in cars and appliances. Neither company has commented on the speculation, but the Wall Street Journal, citing an individual close to Mittal, says antitrust regulators would likely look askance at a deal that consolidates two main suppliers of auto steel. J.P. Morgan concurs with the Journal: it is "skeptical about this deal going through" since it would shrink the number of coated-sheet auto suppliers from three to two. AK Steel's market cap is approximately $3.4 billion. Mittal will complete its merger with Arcelor SA of Luxembourg this summer, creating a company that is triple the size of its closest rival.
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