* Two private equity firms, a Chinese player also interested
* EU commission vice president backs Aperam consortium's bid
By Silvia Antonioli
LONDON, April 12 A consortium led by
Luxembourg-based stainless steel maker Aperam is the
front runner for the acquisition of a stainless steel plant in
Terni, Italy, market sources said this week.
The consortium, which besides Aperam, a firm floated by
ArcelorMittal in 2011, includes Italian steelmakers
Arvedi and Marcegaglia, is expected to place on Friday a binding
bid for the acquisition of the Acciai Speciali Terni (AST)
plant, in central Italy.
Three other firms though are also still in the running:
Chinese steelmaker Tsingshan and private equity firms Apollo and
JP Morgan's One Equity Partners, sources said.
Finnish stainless steel maker Outokumpu has to
sell the steel mill, one of Europe's most modern, by May 7 to
gain approval for the acquisition of ThyssenKrupp's
stainless steel branch Inoxum, the previous owner of AST.
"I think the Aperam consortium is the front runner; it is
the best solution for the European market," a first industry
"There is a belief in Italy that if a private equity company
gets the plant it will downsize it within 3-4 years while they
believe that in the Aperam group there is a long term solution
where Terni is secured."
Italian unions said they would prefer an industrial
participant rather than a financial player to buy the plant to
guarantee its competitiveness.
Outokumpu, Aperam, One Equity Partners and Apollo declined
to comment on the sale process.
APERAM'S LITTLE MIRACLE?
A solo bid by Aperam, already one of Europe four largest
stainless steel players, had been considered unlikely to get
past EU antitrust scrutiny.
Its joint proposal with two smaller Italian players, the
support of the Italian government and the poor state of the
European steel market though are making it more likely to
succeed, industry sources said.
"I think (Aperam CEO, Philippe) Darmayan made a little
miracle here because he worked together with the Italian state
and the Italian state is working to open doors in Brussels.
Italy cannot afford another Ilva," the first source said
referring to troubled Italian steel plant Ilva, Europe's
largest integrated steel mill, which risks having to shut down
and cut thousands of jobs.
Antonio Tajani, Vice-President of the European Commission,
responsible for Industry and Entrepreneurship also expressed his
support for the bid of the European firms.
"I hope the steel plant of Terni goes in the hands of a
European consortium," he said.
The European bid also makes sense from a strategic point of
view, according to a second source, as Arvedi and Marcegaglia
are two of the Terni plant's biggest clients already.
What some doubt is the capability of the three European
players, which operate in a fragile market, to raise enough
money to win the plant, which in Outokumpu's books has a value
of 560 million euros ($735.08 million) but is expected to sell
for less, due to weakness in the steel market.
Some workers also fear some output and jobs might be cut in
Terni, under Aperam's control, as the firm already operates
similar plants in Belgium and the market is heavily oversupplied
at the moment.
South Korean steelmaker Posco had also initially
showed interest by visiting the Terni mill, a third source at
the factory said, but had later lost interest.
THE CHINESE ATTEMPT
Aperam's only industrial competitor in this late phase of
the sale is private Chinese stainless steel pipes producer
Tsingshan, which last visited the Terni plant two weeks ago, the
third source said.
"The Chinese need Terni to get into Europe," he said. "By
buying this plant they would also acquire a new range of
A fourth source however said the Chinese firm had lost
interest in the last few days.
Contacted by Reuters an official at the firm declined to
comment on the Terni plant sale but only said: "We don't have a
steel plant outside of China. Now the plan is not clear, maybe
in the future."
($1 = 0.7618 euros)
(Additional reporting by Francesco Guarascio in Brussels and
Manolo Serapio in Singapore; editing by Keiron Henderson)