LONDON -- Ispat International NV completed the acquisition of Inland Steel
Industries Inc.'s steel unit for $1.4 billion late Thursday, making Ispat the
world's seventh-largest steelmaker and giving it a foothold in the U.S. market.
London-based Ispat paid $888 million in cash for the Inland Steel Co. business
and assumed $510 million in debt. The takeover will nearly double Ispat's
annual sales to about $4.5 billion.
"Our leadership in the mini-mill process and the combined expertise of both
Ispat International and Inland Steel Co. should make Inland Steel one of the
lowest cost and most profitable steel producers in the U.S.," said Lakshmi
Mittal, Ispat International's founder, chairman and chief executive officer.
Ispat and Inland Steel Industries also agreed to put up guarantees for more
than half of Inland's $600 million pension liability, according to the Pension
Benefit Guaranty Corp.
Under the agreement with the federal agency that guarantees pension benefits to
42 million Americans, the steelmakers will make an immediate cash payment of
$25 million into the plan and put up $305 million more in guarantees.
Chicago-based Inland's pension plan covers 27,000 workers and retirees.
The guarantees include $20 million in future cash payments, a $160 million
letter of credit, $75 million in liens on Inland assets and a $50 million
guarantee from Ryerson Tull. The agreement is effective until at least July
Inland's pension plan has assets valued at $1.9 billion and liabilities of $2.5
billion, the agency said.
The United Steelworkers of America, representing 8,000 Inland workers in
Indiana and Michigan, agreed in May not to block the sale of Inland's steel
unit to Ispat.
Ispat, founded in 1989, was built through acquisitions around the world and has
a reputation for slashing costs to increase profits. Chicago-based Inland, a
major supplier to the auto, construction and appliance markets, gives Ispat
facilities to process unfinished steel slabs from Ispat's mills in Canada,
Mexico and Trinidad.
Inland plans to distribute the proceeds of the sale to shareholders through a
Dutch auction. The company hasn't yet disclosed terms of the auction, in which
Inland would give a range of prices at which it would buy its common shares.
The rest of Inland, including an acid-recycling business and an 87 percent
stake in metals distributor Ryerson Tull Inc., is expected to be combined with
the 13 percent of Ryerson Tull that is separately traded. Details haven't been