Morgan Stanley| Arcelor Mittal (MTS) has reached an agreement to purchase Apollo’s stake in Vallourec (French steel tube manufacturer), equivalent to 65.2 million shares (28.4%) for a total of €955 million. The acquisition is expected to be completed in 2H24, once all regulatory approvals are in place.
Alain Gabriel acknowledges that the purchase has been concluded at a reasonable valuation, but expects more clarity on the extent of synergies and/or strategic benefits that such a transaction would bring to Arcelor shareholders, as the deployment of almost €1 billion for the acquisition of this stake competes directly with a share buyback programme, which also currently trades at a steep discount to its historical average (>60%) in terms of EV/EBITDA.
ArcelorMittal, Overweight, Target Price €30/share
