Steel giant, ArcelorMittal (MT) is close to buying KazStroyServices Ltd (KSS), a Kazakhastan-based engineering, procurement and construction (EPC) company.
The company has presence in Kazakhstan, India, Turkmenistan and West Asia and primarily builds oil and gas pipelines and refineries. ArcelorMittal is buying the company in its personal capacity.
KSS owns 52.47% stake in India’s Petron Engineering Construction Limited (PECL), listed on the Bombay Stock Exchange. It has a market capitalization of around Rs 319 crores. The deal is expected to be finalized and announced in about a month and after that, there would be an open offer for the Indian shareholders.
Currently, KSS owns 52.22% stake through Petron Investments Pvt Ltd and another 0.13% through KazStroy Engineering (UK) Ltd.
ArcelorMittal is expected to announce its first-quarter 2011 results on May 11, 2011.
In fourth-quarter 2010, ArcelorMittal reported diluted net loss of $0.51 per share, much below the Zacks Consensus Estimate loss of $0.19, attributable to impairments and some were also related to Aperam.
We believe that steel price momentum will slow and margin concerns will intensify again as a result of added supply, weaker seasonal demand, less restocking and a slowing cost-push. Additionally, ArcelorMittal has acquired a 70% interest in Baffinland Iron Mines Corp. to bolster its mining operations with a high-Fe content lump ore project and it recently spun-off its stainless steel business.
The company has also targeted cost reduction program to achieve run-rate savings of $5 billion by 2013. ArcelorMittal has the highest leverage to a continued steel recovery and will benefit the most from rising raw material prices.
ArcelorMittal competes with other international steel companies like BaoSteel, POSCO (PKX), Nippon Steel and Tata Steel.
Currently, ArcelorMittal has a short-term (1 to 3 months) Zacks #2 Rank (Buy) and a long-term Outperform recommendation.
KOHLS CORP (KSS): Free Stock Analysis Report
ARCELOR MITTAL (MT): Free Stock Analysis Report
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