U.S. and Asian production of coated steel building and construction products has just received a $1.36 billion shot in the arm with a new joint venture by a leading steel producer and coatings maker.
|The signing ceremony in Singapore included (from left) BlueScope Steel CEO Paul O’Malley, Nippon Steel President Shoji Muneoka, and BlueScope Steel Chairman Graham Kraehe.|
NS BlueScope Coated Products will be a 50-50 joint venture of Australia’s BlueScope Steel Ltd. and Japan’s Nippon Steel Corp.
The new venture will produce hot-dip galvanized sheets, painted sheets, roll-formed building products and other coated products on both continents.
The venture is expected to capture a larger share of the $40 billion annual building and construction sector, the companies said in announcing the deal.
For Australia’s BlueScope, the joint venture might just turn things around, as business operations have been ailing recently, according to various reports.
BlueScope said it would receive about $540 million in net proceeds through Nippon Steel’s 50% acquisition of BlueScope’s interest in the businesses after allowing for taxes, minority interests and transaction costs.
|Steelscape, a supplier of metallic-coated and pre-painted steel in the U.S., is a BlueScope Steel Company and will be a part of the new joint venture.|
The joint venture will also help facilitate BlueScope’s entry into new markets—home appliances, for example, the company said. BlueScope has been focused on production of metallic paint and coatings for the construction sector.
BlueScope Chairman Graham Kraehe said Nippon Steel’s investment “clearly highlights the long-term strategic value created by BlueScope over many years.”
Kraehe called the deal “a great vote of confidence in our strategy, global reach, capabilities and our people. It will enhance BlueScope’s growth and opens an exciting new era for the company.”
The joint venture will consist of 14 entities now operated by BlueScope.
The businesses, which employ about 3,000 people, are in Indonesia, Malaysia, Thailand, Vietnam, Singapore and Brunei and North America (Steelscape and ASC Profiles).
In addition to sharing management of the joint venture, Nippon Steel will supply it with substrates (hot-rolled coils and cold-rolled coils) for hot-dip galvanized sheets.
BlueScope will appoint the chief executive of NS BlueScope Coated Products. NSC will appoint the chairman and a number of key executives to assist with business development and the introduction of new technology and products.
The transaction is expected to close by the end of March 2013, pending regulatory approval, Nippon said.
The companies have worked together for more than 40 years on 65 different technology projects.
Also, in 2010, the two signed a comprehensive long-term technical “tie-up agreement” concerning the joint development of next-generation surface-treated sheet steel for the building and construction market, Nippon said.
In addition, Nippon Steel is set to become the world’s second-largest steel maker (after ArcelorMittal) when it merges with Japan’s Sumitomo Metal Industries Ltd. Oct. 1, the company said.