Morgan Stanley | ARCELORMITTAL, OVERWEIGHT. The Spanish firm’s JV “Nippon Steel India” has agreed to buy various assets in India (ports, energy and infrastructure assets) from Essar Group. The net cost is $2.4 billion and the aim of the move is to optimise logistics and the supply chain of raw materials and finished steel products for domestic sales within India, as well as for export. We acknowledge the strategic benefits and the potential operating synergies which arise from this proposed transaction. With regard to the financing of the deal, the company has clarified that any future acquisition will be financed by the JV itself. As such, we do not expect any impact on the group’s FCF generation nor on the outlook for cash returns. Particularly because we do not expect any dividend payment from the JV to the parent company.
