EuroWire January 2007

Transat lant ic Cable

second-largest for 2006, behind the $38.3 billion purchase by Rotterdam-based Mittal Steel Co of Arcelor SA, of Luxembourg. Thom Rose, of Bloomberg News , noted that the purchase of Germany’s biggest steel maker would almost double Nucor’s production and add elevator and cement units to mills in 17 American states. Nucor is the second-largest US steel maker, behind Pittsburgh-based US Steel Corp. The US-German combination would push Nucor to No 2 worldwide by production, behind Arcelor Mittal. Nucor and ThyssenKrupp produced a total of 34.9 million metric tonnes of crude steel in 2005, according to the Brussels-based International Iron and Steel Institute. Mittal’s output was 63 million tonnes; Arcelor’s, 46.7 million. Nucor’s chief executive officer Daniel DiMicco said in June 2006 that he wished to expand outside the US through partnerships. ThyssenKrupp CEO Ekkehard Schulz said in September that his company was looking to spend heavily on acquisitions as far away as Japan. A Nucor-ThyssenKrupp merger would break a run of mergers and acquisitions involving companies from emerging economies, which account for six of the 10 biggest steel making nations. On 20 th October, Mumbai-based Tata offered $7.56 billion for Corus Group Plc of the UK. As many as 252 mergers and acquisitions worth a total of about $78 billion had either been completed or were pending toward the end of 2006. That compares with 219 deals worth less than $20 billion for all of 2005. In other news of Nucor . . . On 6 th October, Nucor Corp announced its selection of Memphis, Tennessee, as the site for a $230 million mill to produce steel for the automotive, heavy equipment, and steel service centre industries. The plant, scheduled to open in the first quarter of 2008, will have a rated capacity of 850,000 tonnes a year. Other new Nucor factories include a $150 million galvanised steel plant in Decatur, Alabama, and a $27 million facility in Utah. The company’s metal shipments have almost doubled in the past five years, over which period Nucor has made a dozen acquisitions. On 1 st November, Nucor announced that its wholly owned subsidiary Verco Decking Inc had completed the purchase of substantially all of the assets of Verco Manufacturing Co for a cash purchase price of approximately $180 million, subject to post-closing adjustments. Verco produces steel floor and roof decking at three locations in the western United States: Phoenix, Arizona; and Fontana and Antioch, California. Nucor’s Vulcraft Group is the largest US manufacturer of steel deck. With the addition of the Verco facilities, Nucor’s total annual deck capacity will exceed 500,000 tonnes. Elsewhere in steel . . . Nihon Keizai reported that Nippon Steel Corp , Japan’s largest steel maker, said it has been in talks with Usinas Siderurgicas de Minas Gerais SA , the No 2 Brazilian steel ❈ ❈ ❈

maker, on strengthening their ties. On 5 th November the Tokyo newspaper said that Nippon Steel would take a 1.7 per cent stake in Belo Horizonte-based Usinas, and that the two companies may jointly build a new plant in Brazil. Nippon Steel owns a 14.4 per cent stake in Nippon Usiminas , which has a 19.4 per cent stake in the Brazilian steel maker. Nippon Steel spokesman told Mariko Yasu, of Bloomberg News , that, while nothing had been decided, “[We are] considering methods that will benefit us” by making links with Usinas stronger.

Telecom

Motorola fights for a piece of a large Indian phone contract

Motorola Inc is smarting over the decision by India’s dominant mobile phone network Bharat Sanchar Nigam Ltd (BSNL) to exclude the American company from a huge expansion project. Writing in the Chicago Tribune on 3 rd November, Mike Hughlett reported that BSNL intends to more than double the capacity of its wireless phone network. “In doing so,” he said, “the company is ordering roughly $5 billion worth of wireless equipment, a big contract in a spotty global phone equipment market.” Motorola, the world’s second-largest cell phone-maker and also a significant producer of wireless equipment, bid for a share of that business. But BSNL passed over Motorola and ZTE to select Sweden’s AB Ericsson and Finland’s Nokia as its suppliers, on grounds that the losing bidders failed to meet ‘technical specifications.’ Hughlett took note of speculation in the Indian press – denied, eventually, by BSNL – that the state-owned company had security concerns about ZTE and Motorola. ZTE is based in China, a regional rival of India’s, and Motorola had planned to source some of its equipment from Huawei, another Chinese company. A BSNL official told the Economic Times of India that his company’s decision was prompted by ‘major deviations from tender specifications in the case of Motorola and ZTE.’ Motorola challenged this assertion, declaring that it ‘responded positively’ to all technical queries by BSNL and that at no point was it told that its bid was being dropped for technical reasons. Motorola, which reportedly claims to have underbid Nokia, is not taking the rejection lying down. It promptly took its argument to court and on the 2 nd November obtained an injunction from the Delhi High Court that temporarily stops BSNL from awarding the contracts. Another hearing was scheduled for 16 th November. Industry observers consulted by the Tribune consider it unlikely that Motorola will ultimately prevail, but they also doubt that a failure to capture any of the BSNL contract would hurt the American company’s position in India. Unlike their counterparts in the US, wireless networks in India – where Motorola’s phones sell very well – are not big phone retailers.

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EuroWire – January 2007