Severstal, the Russian steel maker which is chaired by billionaire Alexei Mordashov, has picked up the Sparrows Point mill in Baltimore, owned by ArcelorMittal (NYSE: MT), for about half the price the company was worth.
The mill was valued at $1.4 billion just a short 4 months ago when a group of investors attempted to put together a deal to acquire the company. It failed because of the inability to raise the needed funds.
Severstal (otc: SVJTF) revealed on Friday that it had agreed to acquire the Sparrows Point mill for only $810 million. The mill has the capacity to produce 3.6 million tons of crude steel. That,s about 20 percent of Severstal's entire production last year.
ArcelorMittal was forced to sell the mill when Lakshmi Mittal bought Arcelor a couple years ago. With the acquisition the company probably would have cornered the entire market. U.S. regulators forced the sale of Sparrows Point for that reason.
The deal had a little controversy surrounding it as an analyst for Antanta Capital, Alexander Churikov, insinuated the low price was a payback for the involvement of Severstal in a deal in the merger with Arcelor.
A spokesman for Severstal responded to that implication saying: "This was an open auction process run by a government trustee."
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