July 25, 2008

Severstal to acquire ArcelorMittal Sparrows Point plant in US

Russian steel major Severstal announced that it has reached an agreement to purchase Sparrows Point steel mill based at Baltimore Maryland in United States. The acquisition is subject to customary closing conditions, including approval by the United States Department of Justice and is expected to close in the second quarter of 2008.

Severstal has agreed to acquire Sparrows Point LLC for an all cash purchase price of USD 810 million.

Seversatl expects substantial synergies with its current US operations in Dearborn, Michigan and Columbus, Mississippi. With the addition of Sparrows Point, Severstal will also improve its distribution channels and increase its geographic reach as the plant provides direct ocean access and proximity to a number of major US railways and highways.

Mr Alexei Mordashov CEO of Severstal said that “With Sparrows Point, Severstal brings into its US portfolio an asset with significant existing value as well as unlocked growth potential. This acquisition presents us with an opportunity to enhance productivity at Sparrows Point through our high standards of operational performance and will benefit our existing US businesses. We expect to realize synergies in Sparrows Point and with SNA that will fuel increased production and profitability. We remain committed to growth in North America and believe in the long term promise of the US market; we’re confident that this acquisition will create value for our shareholders while strengthening our US platform as a whole.”

Merrill Lynch & Co is acting as exclusive financial advisor to Severstal and rendered a fairness opinion to the Board of Directors regarding this transaction. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to Severstal.