Marcegaglia bought a division of Severstal in the EU

Italian steel producer Marcegaglia has acquired Severstal’s assets in Latvia and Poland. This was reported in the press service of the company (the press release is at the disposal of Vedomosti).

“Marcegaglia Carbon Steel has signed an agreement to acquire 100% of Sia Severstal Distribution (SSD), a Latvian company owned in Riga by the Russian steel group”Severstal“. The company has changed its name to Sia Marcegaglia Baltics, a carbon steel service center,” the statement said.

As part of the deal, Severstal transferred its Latvian division to SIA Severstal Distribution (SSD) to Marcegaglia along with its two subsidiaries, Severstal Distribution Sp. zo.o. (Poland) and Severstal Distribution LLC (Ukraine).

The amount of the transaction is not specified. At the same time, the company emphasized that the funds were not credited to the Severstal account after the sale of the unit in the EU, “they will be “frozen” in a special escrow account while the sanctions regime imposed by the EU is maintained,” Marcegaglia explained.

It is specified that this deal will allow the Italian company to strengthen its presence in Northern Europe and the Baltic countries, where it has not been present so far. The deal has been approved by both the Latvian government and the EU competition authorities. In particular, the Directorate General for Competition of the European Commission (EC) approved deal April 5th.

Severstal confirmed the transfer of an asset in Latvia to an Italian company. “The EU sanctions against Alexey Mordashov, in fact, made it impossible for our distribution division to operate in Europe. <...> It is important for us that our colleagues from SIA Severstal Distribution keep their jobs, and the assets that we have been developing for many years continue to work. Therefore, we are happy to hand them over to the new owner,” the statement said.

Marcegaglia produces 6.2 million tons of finished steel products per year from steel semi-finished products supplied by third parties (i.e. it is a re-roller). The company has 29 factories and 60 sales offices around the world. According to its own data, it is the world’s largest independent roller of steel products, the largest manufacturer of welded stainless steel pipes in the world and the leader in the production of welded pipes in Europe.

Severstal announced in early March 2022 that it was halting deliveries to Europe due to the fact that its main shareholder Alexei Mordashov (owns 77%) fell under EU sanctions. Severstal itself is not under sanctions in the EU, although it is included in the black list (SDN list) of the US Treasury. On March 15, 2022, the EU imposed a ban on the import of a wide range of steel products from Russia. The list includes, among other things, uncoated hot-rolled and cold-rolled steel, long products, some types of welded and seamless pipes.