ONE of the flagship United States investments in Slovakia has considered offers for its acquisition that are interesting enough to explore. Though the steelmaker U.S. Steel Košice (USSK), located in eastern Slovakia, has confirmed that there have been talks over its potential sale, it remains tight-lipped about the identity of any potential buyers. The information on the potential departure of U.S. Steel Corporation from Slovakia, which acquired Slovakia’s main steelworks back in 2000, prompted speculation in the local media over who might purchase it, with one of the named players in the industry already denying interest.
“What I can confirm is that we have received expressions of interest in U.S. Steel Košice likely due to its strong financial performance and strategic position in the region,” USSK spokesman Ján Bača told The Slovak Spectator.
Bača attributed the interest in USSK to it being an attractive asset with experienced employees, strong performance and “a very reliable and favourable cost position”. USSK also has a well-positioned product, offering to serve the growing V4 markets, Bača added.
“The United States Steel Corporation believes it is prudent to explore this interest in the context of its overall capital allocation, and in a way that maximises returns to its shareholders,” Bača said, adding that no decisions have been made at this time.
Bača also said that the company cannot provide detailed information about the potential partners “because we have confidentiality agreements with them”.
The speculation
One of the companies named by the local press is ThyssenKrupp, with pundits suggesting that the German company might be open to swapping its plant in Alabama, employing 2,700 people, SITA newswire reported. However, the Sme daily immediately reported that the German firm, which already supplies steel along with USSK to carmakers in Slovakia, had denied interest in purchasing the steel mill.
“We are not interested in the activities of U.S. Steel in Slovakia,” said ThyssenKrupp spokesman Stefan Ettwig as quoted by Sme. Ukrainian steelmakers with shares in a steelworks in Krivoy Rog, Ukraine, as well as Magnitogorsk Iron and Steel Works also made it onto the media’s guess list.
Back in 2010, the Slovak media reported, referring to information from the Pittsburgh Tribune-Review, that ArcelorMittal was interested in the acquisition of USSK but at the time the Slovak steelmaker denied the reports. Laura Nutt from the communications department of ArcelorMittal told Sme on November 12 that her company would not comment on speculation emerging on the market.
The Hospodárske Noviny business daily reported that Russian tycoon Roman Abramovich is interested in purchasing USSK through his firm Evraz, through which he wants to gain influence in the central European market. The second potential investor named by Hospodárske Noviny on November 13 was the Ukrainian company Metinvest.
Some history
USSK, the largest employer in eastern Slovakia, with 11,000 workers, emerged via the acquisition of Východoslovenské železiarne (VSŽ) in 2000. Currently, with its daughter companies, it is one of the largest producers of flat-rolled products in Europe and supplies mainly the automotive, machine and electro-technical industries.
At the time of the acquisition of the ailing VSŽ, which before running into problems had bought various unrelated assets such as several newspapers and a football club, USSK took on the obligation to invest at least $700 million in the company over a period of 10 years. The state promised not to reopen any tax-related issues as well as participate in the removal of, at the time, unknown ecological burdens, which might have emerged by 2004. The tax holidays granted to USSK officially ended in 2010, according to Sme. USSK was eligible for tax relief totalling $430 million under the then exchange rate, although this sum had been drawn by 2008, Sme wrote.
