Nordic Ovako joins French bid for steel maker Ascometal

PARIS Thu May 8, 2014 1:14pm EDT

PARIS May 8 (Reuters) - Nordic specialty steelmaker Ovako has joined a group of French industrialists and investors to bid for the assets of bankrupt French engineering steel maker Ascometal, the companies said in a statement on Thursday.

The French group around privately held Asco Industrie includes Ascometal founder and former Airbus CEO Noel Forgeard, former Arcelor chief executive Guy Dolle, and Frank Supplisson, who was deputy-chief of staff of former economy, finance and industry minister Christine Lagarde.

"An independent Ascometal, with the right financial and industrial backing, is the best way to successfully manage the transition from a company with a problematic history to a profitable company," Supplisson and Ovako chief executive Tom Erixon said in a joint statement.

The French group said on Monday it plans to bid at least 40 million euros ($56 million) for the Ascometal assets, will hire its industrial staff, invest 135 million euros over the next four years and leave current CEO Jacques Schaffnit in place. It also plans to cut 62 administrative jobs.

French media have reported that several other firms, including investment funds Anchorage and Apollo Global Management, the former owner of Ascometal, are also planning a bid.

Brazil's Gerdau SA, the largest steelmaker in the Americas, has also made a preliminary proposal to take over operations of Ascometal for 41.5 million euros, according to a securities filing in April.

The Nanterre commercial court is set to review the bids on Wednesday and is expected to make a decision on a winner before the end of May.

"Just like Mittal did with flat steel, Gerdau is buying up all the long steel plants it can and then closes half of them to rationalise," Supplisson told Reuters.

"The European players in this industry can either work together to resist Gerdau, or wait for it to buy them out," he added.

Ascometal, which operates six plants in France and had sales of 969 million euros in 2011, supplies specialist steel products to the car-making, engineering and oil sectors.

Ovako is a producer of bars, tubes and rings for heavy vehicle, automotive and engineering industries. It had 2013 sales of 850 million euros and employs 2,995 staff.

Other top European long steel makers are Germany's Saarstahl, Italy's Venete, Gerdau Spain and Tata Steel in Britain.

Ovako's Erixon told Reuters in an interview in September that more private equity firms might take control of steel companies in Europe because industrial players are less keen to buy assets in the oversupplied sector. Ovako itself was bought by private equity firm Triton in 2010.

The European steel sector has been battered by austerity measures following the global economic meltdown in 2008 which have caused demand to shrink in the last few years.

Private equity firms such as Apollo and JP Morgan's One Equity, are among those who have shown interest in buying assets in the sector. (Reporting by Geert De Clercq, editing by William Hardy)