ArcelorMittal SA rejects $1-billion acquisition bid from Networth Investments

Timilehin Adejumobi -
Key Points
  • ArcelorMittal South Africa has declined a $1-billion acquisition bid from Networth Investments, reaffirming its commitment to remain operationally independent.
  • Networth’s proposal included a leveraged buyout and plans to shift production from low-margin steel to higher-profit stainless steel products.
  • The acquisition plan involved R19 billion ($1.07 billion) in capital investments and aimed to boost South Africa's economy by 1.5% annually starting in 2028.

ArcelorMittal South Africa has declined a $1-billion acquisition offer from Networth Investments, asserting its commitment to operational independence despite recent ownership talks.

The Gauteng-based steel producer, partly owned by South African businesswoman Noluthando Gosa, stated that the proposal did not meet its criteria for a bona fide offer.

The offer from Networth aimed to secure a controlling 60-percent stake in the company, along with an additional two percent held by foreign investors. Networth’s plan sought to shift the company’s production strategy toward higher-margin products, such as stainless steel, from its current low-margin focus.

Bid details and strategic plans

Networth CEO Harold Vermaak argued that South Africa’s steel industry holds untapped potential, referencing Columbus Stainless as an example of how the sector could be revitalized.

Vermaak's strategy included investments in AI automation and green energy, leveraging power from Eskom’s Koeberg nuclear plant and a 120MW hydrogen gas facility in Saldanha Bay.

Networth planned to align financing with Indian benchmarks and boost exports of green steel to China. Additionally, a Swiss steel trading firm generating €7.1 billion ($7.6 billion) annually was expected to secure an offtake agreement.

The Industrial Development Corporation (IDC) would transfer its exposure in ArcelorMittal South Africa to Networth for a 70 percent stake, with outstanding debt to be written off.

Vermaak estimated that consolidating South Africa’s steel assets could increase the national economy by 1.5 percent annually by 2028, while generating sustainable jobs.

Amsa’s market position and economic impact

With a market capitalization of R1.89 billion ($107 million) on the Johannesburg Stock Exchange, ArcelorMittal South Africa (Amsa) plays a key role in the economy. Its annual capacity of 7 million metric tonnes of liquid steel is critical to domestic industry.

Gosa, a non-executive director at Amsa, holds a 6.15-percent stake in the company, underscoring her wealth from a diversified investment portfolio.

The company recently benefited from a nine-percent safeguard tariff on hot-rolled steel imports, imposed by the International Trade Administration Commission to shield local manufacturers from foreign competition.

In 2023, Amsa contributed R6.15 billion ($334.7 million) to the government’s finances, further cementing its role in South Africa’s economy.