EU Approves SSAB Deal for Rautaruukki, With Conditions
Divestments must still be made to address the anticipated reduction of competition within markets for certain carbon steel products in the Nordic countries and for stainless steel and profiled steel construction sheets in Finland.
The European Commission has cleared the acquisition by Swedish steelmaker SSAB AB (Stockholm, Sweden) of Rautaruukki Oyj (Helsinki, Finland), a manufacturer of carbon steel and steel components and systems for the construction and engineering industries. The deal is subject to the divestment of five businesses in Finland, Sweden and Norway, the European Union’s merger review unit said Monday.
The Commission had concerns the 10.1 billion Swedish kronor ($1.5 billion) deal, as initially laid out, would have reduced competition significantly within the markets for certain carbon steel products in the Nordic countries and for stainless steel and profiled steel construction sheets in Finland. The divestments are meant to address these concerns.
“These carbon steel flat products are used from cars to construction materials, and constitute an essential input for many European companies,” explained Joaquín Almunia, the Commission vice president of competition policy, in a news release. “Today’s decision gives the Commission’s green light to the creation of a European and even world leader in specialty carbon steel, while also ensuring that steel customers in the Nordic countries will not be harmed.”
Announced in January, the deal would pair SSAB’s specialty in high-strength steel used in machinery and trucks with Rautaruukki’s focus on making steel products, such as building components, steel barriers and pipes. The companies estimate the merger will create annual cost savings of up to 1.4 billion kronor and a roughly 5 percent reduction in their combined workforce of 17,400 employees over three years.
The global steel industry has remained a fragmented sector during the recent financial crisis and companies gradually have ramped up capacity despite sluggish demand. Much of that added production comes as governments use subsidies to support local jobs and industries.
Editor’s note: This report originally appeared in separate news releases from SSAB AB and the Wall Street Journal.