Russian firm to buy steel mill in Maryland

A Russian steelmaker run by one of the world’s richest men announced Friday that it would buy a Maryland steel mill from a company run by a rival billionaire for hundreds of millions of dollars less than once sought.

Russian steelmaker OAO Severstal, run by Alexei Modashov, said it had agreed to buy the Sparrows Point plant from ArcelorMittal, run by billionaire Lakshmi Mittal, for $810 million. ArcelorMittal was formed when the Dutch firm Mittal Steel acquired Arcelor of Luxembourg. The combined ArcelorMittal agreed to sell the massive plant to resolve Justice Department antitrust concerns, but a $1.35-billion deal fell through in December.

Severstal said in a statement that the all-cash deal “reflects a significant strategic opportunity to add complementary assets and scale to Severstal’s existing U.S. business.”

“With Sparrows Point, Severstal brings into its U.S. portfolio an asset with significant existing value as well as unlocked growth potential,” Modashov, the company’s chief executive, said in a statement.

Charles Bradford, a steel industry analyst with Soleil Securities, said the bid was in line with his valuation of the plant. The analyst said he did not know why the price was so much lower this time but added that he was surprised at the amount of the previous bid.

“It’s pretty clear the last time the people who won the bid couldn’t finance it,” Bradford said.

The $1.35-billion deal to sell the plant to E2 Acquisition Corp., an international investment group led by Esmark Inc. of Chicago Heights, Ill., collapsed in December because of what Mittal said was E2’s inability to secure financing.

Severstal has plenty of cash and should not have any problem paying for the plant if the deal goes through, Bradford said.

In Washington, Gina Talamona, a Justice Department spokeswoman, said its antitrust division “expects to conduct a prompt review of the agreement and the proposed acquirer.”

Severstal said the deal was expected to close in the second quarter. ArcelorMittal did not immediately comment.