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ArcelorMittal faces uphill struggle in Ilva takeover

ArcelorMittal's planned acquisition of Ilva International SpA faces new challenges after Italy's Puglia and Taranto regions filed an appeal in court against the government's approval for the buyers' environmental plan as part of the deal.

If the appeal succeeds, the deal may be terminated, while Europe's largest steel plant may be closed temporarily. However, Reuters reported Dec. 4 that either outcome would benefit the EU steel sector in the short-term.

Earlier in the year, a consortium comprising ArcelorMittal and Marcegaglia won a €1.8 billion deal to acquire Ilva and plan to invest a further €2.4 billion over seven years.

EU antitrust regulators initiated a probe into the acquisition over concerns that the transaction would reduce competition for some steel products and result in higher prices.

The inquiry may see ArcelorMittal's bidding partner, Marcegaglia, withdrawing from the deal, according to Reuters.

However, industry participants said Marcegaglia's exit from the partnership is unlikely to impact the steel industry in the block since the Italian steel processor holds only 6% of the partnership.

"If the appeal is successful, Ilva may be at least temporarily shut down, removing 6% of Euro flat steel production and likely driving spot prices higher," Reuters added, citing a Jefferies Group report.

If the ArcelorMittal-led consortium is successful in acquiring Ilva, it would improve pricing power of EU steelmakers in the long term by lowering the number of market sellers, the newswire noted.