Steel: ArcelorMittal pays nearly a billion euros for a stake in Vallourec

An industrialist as a reference shareholder. Vallourec, one of the world leaders in seamless tubes, could not dream of better. He has just announced the entry into his capital of ArcelorMittal. The latter buys back the 28.4% held by the American investment fund Apollo (the balance is floating) for 955 million euros. That is to say an amount slightly lower than the current stock price, Vallourec having, like other companies, seen its price rise significantly, notably driven by the publication of good results for 2023. ArcelorMittal will also have two representatives on the Vallourec board of directors, thus replacing Apollo.

Apollo entered the capital of Vallourec in 2021, via debt recovery operations. The group was then in the process of financial restructuring. Since then, Philippe Guillemot, who arrived at the head of Vallourec in March 2022, has clearly raised the bar. The opportunity for Apollo to carry out a very good financial transaction, the amount of which has not been communicated, after having participated in the restructuring of Vallourec.

The entry into the capital of ArcelorMittal, a CAC 40 group, whose head office is in London, but with very strong French roots, reinforces the strategic choices of Philippe Guillemot. Its acquisition of a stake in the capital of Vallourec allows it to gain a foothold in a business in which it was not yet present: advanced steelmaking with the seamless tubes business. The latter, essential for the exploitation of hydrocarbons, are now carving out a future in the energy transition: hydrogen storage, CO2 capture and geothermal energy.

ArcelorMittal undertakes not to launch a takeover bid for Vallourec, at least over the next six months. “The time horizon of an industrialist is different from that of a financial investor,” recalls Philippe Guillemot, who remains CEO of Vallourec, with the support of its new major shareholder.

The steel and mining expertise of the two groups is complementary. The merger should allow ArcelorMittal to strengthen its expertise in downstream applications. This is also part of the steel giant’s strategy to strengthen its position in decarbonization and the energy transition.

The operation, which has yet to receive the green light from competition authorities, should be completed during the second half of 2024.