A group led by ArcelorMittal has won the race to buy Ilva, the Italian owner of Europe’s biggest steel plant that was nationalised after an alleged environmental disaster.
Carlo Calenda, Italy’s economic development minister, signed a decree on Monday approving the €1.8bn offer, led by the world’s largest steelmaker, in a move that will deliver the century-old industrial concern back into private ownership.
Ilva includes the Taranto steelworks in southern Italy, the continent’s largest by output capacity, which was accused of toxic emissions linked to high cancer rates in the area, as well as another plant in Genoa among other facilities.
The sale by the Italian government is aimed at ending a saga that has dragged on for years in which the debt-laden business fell into insolvency, putting 14,000 jobs in jeopardy.
It also represents a step toward the long-awaited consolidation of Europe’s steel industry, which has struggled with overcapacity and weaker profitability since the global financial crisis.
Tata Steel of India and ThyssenKrupp of Germany are also in talks about merging their European steelmaking operations.
The successful bid for Ilva by the AM Investco consortium, which also includes Marcegaglia, the Italian steel processor, and Banca Intesa Sanpaolo, saw off a rival offer from a grouping led by JSW, Sajjan Jindal’s Indian steel group.
Negotiations will now begin between the winning consortium and officials with a view to fine-tuning some aspects of the deal.
Lakshmi Mittal, chief executive of ArcelorMittal, said there was an opportunity to re-establish Ilva as “Italy’s premier steel company”.
“We will work with all interested parties to ensure a stronger, better and cleaner future for Ilva, its employees and the regions in which it operates,” he added.
As part of the tender process, officials examined the prospective buyers’ environmental clean-up plans as well as their industrial blueprints for the business.
The winning party has pledged to make investments of €2.4bn until 2023 on top of the €1.8bn price tag.
“Ilva can soon start recovering if properly managed,” wrote analysts at Berenberg. “The potential advantage for Ilva from the combined support of ArcelorMittal?.?.?.?and Marcegaglia?.?.?.?may soon translate into significantly visible improvements of both Ilva’s operating cash flow and product mix.”
However, a question hangs over Ilva’s workforce — a thorny issue in southern Italy, which suffers from high rates of unemployment.
According to the government statement, the winning consortium was open to talks about keeping job numbers at roughly 10,000, a higher level than it originally had proposed as part of its plan.
Laid-off workers are expected to be employed by the state as part of the clean-up operation. Even so, trade unions recently took industrial action over potential redundancies.
