Sale of TK’s Italian AST mill imminent, Marcegaglia and Arvedi favored

Thyssenkrupp’s sale of its Italian unit Acciai Speciali Terni, or AST, could go through in the next couple of weeks, with two Italian bidders – flat producer Arvedi and re-roller Marcegaglia – very much in pole position according to industry sources.

Marcegaglia has in the past confirmed its interest, and while Arvedi has not, nor has it denied interest. When contacted by S&P Global Platts both declined to comment.

AST, the only integrated stainless mill in Italy, is a strategic asset for the Italian industry so the government is watching very closely what is happening. Last week economic development minister Giancarlo Giorgetti said that “the sale of AST could be completed even before the end of the month.”

China’s Baosteel and South Korea’s Posco had been talked about as potential bidders for AST, although neither had confirmed their interest.

The possibility of the Italian government using its “golden power”, the power to limit or stop foreign direct investments and corporate transactions involving Italian strategic assets, is believed to have discouraged foreign buyers.

Closing of a deal is not expected to happen before the end of Q4 although it is unlikely that either Arvedi or Marcegaglia would have any antitrust problems, so the greenlight from the European Commission should come relatively quickly if they are the ultimate winners.

AST, which has a capacity to produce around 1.3 million of crude steel, of which 70% is stainless and the rest carbon steel, is seen as good a match for both the Italian companies.

Marcegaglia is the largest European steel re-roller and largest worldwide tube producer. Marcegaglia produces around 550,000 mt/year of stainless steel products and buys around 30% of its stainless black steel feedstock from AST.

If Marcegaglia were to buy AST, the company would not only acquire primary production but would also increase its stainless market production.

Arvedi, on the other hand, is also a buyer of Terni stainless hot and cold rolled coils, buying around 15% of its feedstock from Terni, according to industry sources.

Arvedi could also being interested in electrical steel, which it used to purchase from AST.

Sources close to the matter said that as the steel market had improved so much recently the deal’s value could rise to around Eur600-800 million.

Thyssenkrupp put AST up for sale in May 2020 as part of a wider restructuring.

Both the Italian government and Thyssenkrupp declined to comment when contacted by Platts.

Union sources told Platts that AST is expected to achieve its 2021 production target of 1 million mt.

— Annalisa Villa