Merger creates biggest steel firm

Mittal will be the largest steel manufacturer in the world

Three global steel giants are coming together to create the world's largest single producer.

Dutch-based Ispat and LNM, both owned by UK steel magnate Lakshmi Mittal, are to join forces with US-based International Steel.

The deal, worth a total $17.8bn (£9.6bn) in shares and cash, will create a new company, Mittal Steel, which will be based in Rotterdam.

Mittal will have annual sales of $30bn and an output of 57 million tonnes.

It will employ 165,000 people, spread across 14 countries.

'Increased reach'

Mr Mittal said the company, which is seeking a dual listing on the New York Stock Exchange and on Euronext Amsterdam, would have a global reach.

Annual production Mittal, Netherlands - 57 million tonnes Arcelor, Luxembourg - 42.8 Nippon Steel, Japan - 31.3 JFE, Japan - 30.2 POSCO, South Korea - 28.9 Shanghai Baosteel, China - 19.9 Corus, Netherlands, UK - 19.1

"These transactions dramatically change the landscape of the global steel industry," he said.

"(The merger) provides Mittal Steel with a more significant presence in important industrialized economies such as those in North America and Europe, and in economies that are expected to experience above average growth in steel consumption, including Asia and Africa."

The new group will produce both flat and long steel products, serving the automotive, appliance, machinery and construction sectors.

Industry support

Mittal Steel is being formed by a complicated two-step merger

Firstly, Ispat is buying LNM in a reverse takeover, financed by $13.3bn share issue.

The new Mittal Steel company will then pay $42 per share in cash and stock to the shareholders of Ohio-based International Steel.

Mr Mittal was recently estimated to be the fifth richest person in the UK.

Global steel rivals welcomed the creation of Mittal Steel, saying consolidation was just what the industry needed.

"We welcome this news, which contributes to the consolidation of the steel industry, which is still fragmented," said Guy Dolle, chief executive of European steel consortium Arcelor, the previous world number one producer.

"This merger supports our long-term vision of the industry, which in five to 10 years will be led by five or six global groups, each producing 80 to 100 million tons of steel."