It will snap up Italy’s second-largest steel firm for Rs 600 crore to gain a foothold in the European market
In a bid to get a foothold in the European market, Sajjan Jindal-promoted JSW Steel has signed a deal with Algeria’s Cevital to acquire Italy’s second largest steel firm Aferpi (Acciaierie e Ferriere di Piombino SpA) for around Rs 600 crore.
According to a reliable source, who spoke to DNA Money on condition of anonymity, the current capacity of Aferpi for producing steel is around two million tonnes. He said JSW Steel wants to enhance it to over three million tonnes over the next two to three years.
“The acquisition of Aferpi will help JSW foray into the European market and cater to automobile majors in the region,” said the source.
The buyout of the Italian steelmaker has come at a time when JSW Steel is eyeing the Essar steel in the domestic market. JSW is the investment partner in the bid submitted by Russia’s VTB Bank-led Numetal consortium for Essar Steel in the second round, which has for now been declared invalid by the Ahmedabad bench of the National Company Law Tribunal (NCLT).
According to the source, JSW’s senior officials have already reached and an agreement document has been signed at Italy's Ministry of Economic Development.
The company is likely to announce the deal on Saturday or late tonight.
“It will help JSW Steel to expand its reach in the specialised steel market, especially in the automobile sector. The company will present the industrial plan for Aferpi, which is part of the diversified Cevital Group with a presence in different sectors across the world,” the source said.
Aferpi was originally owned by Russia’s Severstal and has an annual steel production capacity of about two million tonnes in Piombino and manufactures special steels used in railway, automobile and earth-moving vehicles, among others.
Cevital, the largest privately-held group in Algeria, had bought Lucchini in 2014 and renamed it as Aferpi.
Aferpi is currently working on projects that involve production of one million tonnes of long steel products and revamping of wire rod and bar mills, installation of one electric arc furnace of one million tonnes capacity with two continuous casting machines, installation of a new rails- and beams-rolling plant and installation of the second electric arc furnace and the third continuous casting machine.
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