The current owner of Sparrows Point is a rapidly growing multinational steel giant controlled by one of the world's richest men.
Sparrows Point's new owner will be a rapidly growing multinational steel giant controlled by one of the world's richest men.
But there are some key differences.
Seller ArcelorMittal is controlled by the world's fourth-richest man, Lakshmi N. Mittal, according to Forbes magazine, which this month estimated his net worth at $45 billion. Mittal was already a billionaire when he began buying up steel companies, and the behemoth he's assembled is the world's biggest steelmaker.
The new owner is OAO Severstal, formed in the aftermath of the Soviet Union's collapse. And the man who oversaw its growth, Alexei Mordashov, became the 18th-richest man in the world according to Forbes, with a net worth pegged at $21.2 billion - up from 54th in a single year.
Mordashov was born in 1965 in the steel town of Cherepovets, on the Volga River about 250 miles north of Moscow and roughly the same distance east of St. Petersburg. (Severstal means "Northern Steel" in Russian.) Cherepovets is sort of a Russian version of Gary, Ind., or Bethlehem, Pa., during the heyday of American steel - a moderate-sized city dominated by a steel mill.
The mill, now run by Severstal, employs 36,000 people in a city of 300,000, according to Gregory Mason, Severstal's chief operating officer, who calls it "basically ... a company town."
Mordashov's parents both worked in the mill, and when he completed studies in industrial economics at Leningrad Institute of Economics and Engineering, he came home to the mill in 1988 as a cost controller, according to Mason and a company history.
In 1992, he became chief financial officer. And in 1993, as the Soviet Union broke up, the steelmaker was among the state-owned industries that were privatized. Just a few years later, Mordashov became chief executive at age 31.
Through what was described in a BBC profile as "quick-footed and complicated financial deals," he managed to claim ownership of most of Severstal. According to Severstal, Mordashov owns 82 percent of the company's shares. "We never seized anything, we never twisted anyone's arm, we never used state organs or corruption," Mordashov told Forbes.
Over the same period, Lakshmi Mittal was busy turning his family's steel business, which originated in India, into an international Goliath and Severstal rival.
"Severstal and Mittal are bitter enemies," said Mark Reutter, author of Making Steel.
When Mittal made a hostile takeover bid for Arcelor SA of Luxembourg, Arcelor tried to engineer a combination with Severstal instead. But Mittal won Arcelor, prompting the U.S. Justice Department to order the sale of Sparrows Point to settle antitrust issues.
Severstal was considered a potential acquirer of Sparrows Point last year, but ArcelorMittal ended up signing a deal with E2 Acquisition Corp., a consortium led by Chicago-based Esmark Inc. That deal fell through after E2 failed to secure financing or a labor agreement, giving Severstal another shot.
Much of Severstal's growth has come in the past few years as it moved outside the former Soviet Union to buy steelmakers in Italy, France and the United States.
In the United States, Severstal acquired the former Ford Motor Co.-owned Rouge Steel mill in Dearborn, Mich., and has the largest interest in a new Mississippi mini-mill called SeverCorr, which began production last year. Severstal turned the Michigan factory profitable, but a shutdown of the blast furnace for more than three months last year left Severstal North America roughly at break-even for the year.
American operations bring in about one-sixth of the company's revenue, which was $15.2 billion last year.
"It's a good, well-run company, and they've got their hands full with the former Rouge Steel, which is kind of running into problems," said Christopher Plummer, managing director of Metal Strategies Inc., a management consulting firm for the steel industry.
Plummer said Severstal has done a good job trying to turn the Dearborn plant into a top-tier steel mill. The plant bears some similarities to the Sparrows Point plant, in that it is in need of investment. Severstal's purchase of Sparrows Point will make it the fourth- or fifth-largest steel producer in the United States, depending on who is doing the ranking.
"They will then be one of the major steel companies here," Plummer said.
firstname.lastname@example.orgSun reporter Paul Adams contributed to this article.Copyright © 2014, The Baltimore Sun