Potential $7.8bn bid for US Steel would take 27% of ArcelorMittal’s EV and raise debt to ~0.8x DFN/Ebitda


Banc Sabadell | According to press reports, ArcelorMittal (MTS) is considering a bid for US Steel, although there is no certainty at this stage that the deal will go ahead. US Steel on Sunday rejected an offer from Cleveland-Cliffs that values the company at around $7.3 billion (~€6.7 billion) and represents a 43% premium on its share price. Also US steelmaker Esmark reportedly launched an offer of $7.8 billion (~€7.15 billion).

Assessment: Pending confirmation of whether ArcelorMittal finally joins the bid, as well as the terms of a potential offer, a deal in the vicinity of $7.8bn (EV), would represent ~27% of Arcelor’s EV and according to our estimates, would raise indebtedness to levels of ~0.8x DFN/EBITDA (vs -0.2x in 2024 BS(e)), a level we see as reasonable. From an assessment point of view, the potential offer would value US Steel at 5x EV/EBITDA 2024 vs 3.9x ArcelorMittal’s share price. At a strategic level, if the deal is completed, Arcelor would again increase its presence in the US after the sale of most of its US assets to Cliffs three years ago.

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