(Reuters) -Acerinox and Aperam are in talks about a possible merger that could create Europe’s top producer of stainless steel, the Spanish and Dutch companies said on Friday.
“Discussions are at an early stage, and no agreement has been reached as to the scope, structure or terms of any possible transaction,” Aperam said in a statement, confirming a report by Bloomberg News.
Analysts at Jefferies estimate that a possible tie-up could create a European player with a capacity of 2.3 million tonnes (Mt), far outpacing the current leader, Finland’s Outokumpu at 1.4 million tonnes.
“The combined group would become one of the top global players in the stainless steel industry, and a clear leader in the United States and Europe,” Banco Sabadell analysts said.
However, both brokerages raised concerns about possible hurdles with Europe’s competition authorities.
A deal would require the backing of the Mittal family, which holds about two-fifths of Aperam.
The company was spun off from ArcelorMittal in 2011.
It would also require the backing of the March family which holds 18% of Acerinox through a holding.
The Spanish company had a market value of 3.3 billion euros ($3.6 billion) at the close of trade on Thursday, slightly exceeding Aperam’s 3.1 billion.
Spain’s regulator suspended trading in Acerinox shares, while those of Aperam were up by almost 5% in Amsterdam at 0917 GMT.
($1 = 0.9295 euros)
(Reporting by Sarah Morland; Editing by Edmund Blair)
