European Commission assesses Marcegaglia’s Severstal Distribution acquisition plan

Marcegaglia plans to acquire Latvia-headquartered Severstal Distribution SIA from Russian steelmaker Severstal, Kallanish notes from a European Commission Directorate-General for Competition notice.

The Italian steel processing group’s Marcegaglia Carbon Steel subsidiary would thereby acquire full control over the Riga-based service centre, as well as its subsidiaries Severstal Distribution Sp.z.o.o. in Poland and Severstal Distribution OOO in Ukraine. The units are active downstream of the supply chain, which includes only the distribution of flat and long products, without any activity in production, points out the EU’s competition authority, which is assessing the potential acquisition.

Since the outbreak of war in Ukraine and consequent EU sanctions against Russia, it has become challenging for Severstal to continue operating its European subsidiary. Severstal said 12 months ago it was seeking to keep the Latvian unit running but this would be possible only for another two months due to EU sanctions on Severstal’s majority shareholder. The unit’s 2021 revenue amounted to €1.53 billion ($1.63 billion).

The Polish arm of Severstal Distribution was sanctioned by the Polish government last April to effectively prohibit cooperation with its parent. The Polish government said over PLN 2 billion ($451.8 million) was transferred from the Polish unit to the Russian parent in 2021.

Italian re-roller Marcegaglia has been busy in the acquisition market recently, completing the takeover in January of the majority of Outokumpu’s long products division (see Kallanish passim).

Adam Smith Poland