OAO Severstal, the Russian steelmaker controlled by billionaire Alexey Mordashov, is close to an agreement to sell its U.S. plants to Steel Dynamics Inc. and AK Steel Holding Corp., people familiar with the matter said.
The deal, which could be announced as soon as next week, may value the two plants at just over $2 billion, said the people, who asked not to be identified discussing a private matter. Steel Dynamics would purchase Severstal’s plant in Columbus, Mississippi, while AK Steel would get the factory in Dearborn, Michigan, one of the people said.
Severstal’s imminent exit from the U.S. comes amid heightened tensions between America and Russia over Ukraine, where pro-Russian separatists continue to control key cities. Mordashov and Severstal haven’t been targeted by U.S. or European Union economic sanctions although as of April his companies controlled a stake of about 6 percent in OAO Bank Rossiya, which has been targeted by the U.S.
“The deal is just good for the company,” Morgan Stanley analyst Dmitry Kolomytsyn said by phone from Moscow. Severstal has been looking for a buyer since December “so the agreement to sell those assets has nothing to do with the Russia-West tensions over Ukraine.”
Severstal may use the proceeds to pay dividends, which will support its share price, Kolomytsyn said.
On July 15, Severstal agreed to sell its U.S. coal unit to Canada’s Corsa Coal Corp. for $140 million.
Elena Kovaleva, a spokeswoman for Cherepovets-based Severstal, and Mike Wallner, a spokesman for West Chester, Ohio-based AK, declined to comment on the sale of the plants. No one at Fort Wayne, Indiana-based Steel Dynamics could immediately be reached for comment.
The U.S. steel industry has been dogged by excess capacity and depressed prices since the financial crisis. As of July 14, 21 percent of its capacity was unused, according to data from the American Iron & Steel Institute. U.S. steelmakers have also fought a succession of legal battles to curb cheap imports.