9 Jun 2006 17:23
OJSC Novolipetsk Steel09 June 2006 Novolipetsk Steel (NLMK) 9 June 2006 Novolipetsk Steel (NLMK) Agrees to Acquire 100% Interest in VIZ Stal Novolipetsk Steel, NLMK (LSE: NLMK), the leading Russian steel producer, ispleased to announce that it has agreed to acquire 100% of the issued sharecapital of VIZ Stal, the second largest Russian electrical steel manufacturer,for USD 550 million. The acquisition is to be financed in full from NLMK'sexisting cash funds. Based in Ekaterinburg, VIZ Stal is a rolling facility which specializesexclusively in electrical steels. VIZ Stal produces cold-rolled electricalsteel sheet, and has a 56% share of the Russian grain-oriented steel market andabout 11% of the world market. VIZ Stal's production capacity is approximately200,000 tonnes of electrical steel per annum. Sales revenue of VIZ Stal for the first half of 2006 is estimated at USD 250million. The EBITDA margin for the same period is expected to exceed 50%. NLMKhas a long-standing relationship with VIZ Stal, being its supplier of hot-rolledcoils. The acquisition will make NLMK number one in Russia and among the topthree in the world market for electrical steel. For NLMK, the acquisition of VIZ Stal is an important step in the development ofhigh value-added product portfolio. NLMK's management has already identifiedsubstantial synergies with the newly acquired asset and expects to improve VIZStal's cost structure while enhancing the modernization and efficiency of itsproduction facilities. Mr. Vladimir Lisin, NLMK's Chairman and controlling shareholder, commented: "At a time of an increasing competition for quality assets, the acquisition ofVIZ Stal allows NLMK to become a major player in the electrical steel business.The electrical steel market offers one of the highest profit margins in theindustry. This acquisition is in line with the key element of NLMK's strategy -our 'profits before tonnes' approach." For further information:NLMKAnton Bazulev +7 495 915 1575Financial DynamicsJon Simmons +44 207 831 3113 This information is provided by RNS The company news service from the London Stock Exchange