Not surprisingly, an ‘overwhelming majority’ of ArcelorMittal (MT) shareholders approved the spinoff of its stainless and specialty steel businesses today. The new company, Aperam, will be a global leader in stainless steel production, an industry which has been plagued with overcapacity and hurt by the global slowdown. The spin is more conducive to industry consolidation and allows the company to focus exclusively on improving its operations. Exposure to the emerging markets, especially Brazil, is a big positive for the company which should also benefit from improvement in the overall economy.
Looking at the ‘schedule’, shares of the new company will start trading on an as issued basis tomorrow, but will be allocated only to shareholders on record as of the close on January 28th (might be allocated the 31st in some areas). ArcelorMittal holders will receive one Aperam share for every 20 ArcelorMittal shares owned. Some quick math reveals that Aperam will have approximately 78 million total shares outstanding and an implied value of ~$2.75b. Some peers which can be used for comparative analysis include (some are better than others): Acerinox, Outokumpu, ThyssenKrupp and Posco.
Aperam will be listed in Luxembourg, Paris and Amsterdam, but will trade OTC in the US under the ticker ‘APAM’. As a result of the spin, Aperam could face significant technical selling pressure as it will be deleted from several indexes including the CAC 40, Euro STOXX 50, IBEX 35 and MSCI Standard. That could represent around 10% of the free float. Keep in mind that the Mittal family, unlikely sellers, is expected to own approximately 40% of Aperam’s outstanding shares post-spin.
We will keep you updated. For some more information on the spin, please see our earlier post here.
Disclosure: Author currently holds no position in any stock mentioned.