Apollo Funds Agree to Sell 28.4% Stake in Vallourec to ArcelorMittal
Apollo-managed Funds have agreed to sell 65.2 million shares in Vallourec SA to ArcelorMittal for €14.64 per share, marking a 28.4% equity interest and a total transaction value of approximately €955 million. The sale signifies Apollo Funds' exit from the investment after achieving record profitability and operational transformation under Philippe Guillemot's leadership.
The sale of a 28.4% equity interest in Vallourec SA by Apollo-managed Funds to ArcelorMittal represents a significant shift in ownership of a major player in the tubular steel products industry. This transaction, valued at approximately €955 million, not only provides liquidity for the Apollo Funds but also indicates a strategic exit from a successful investment. The sale is reflective of Apollo's confidence in Vallourec's current market position and its potential for future growth, particularly in the energy transition markets.
From a market perspective, the deal underscores the attractiveness of Vallourec as an investment, given its record profitability and operational transformation. The transaction may also signal consolidation in the sector, with ArcelorMittal further strengthening its position through this acquisition. Market observers should monitor Vallourec's performance post-transaction to assess the impact of the change in ownership on its strategic direction and market share.
Analyzing the financial implications of the sale, the substantial increase in EBITDA from €258 million in 2020 to €1,196 million in 2023 suggests a successful turnaround strategy implemented by Apollo, enhancing Vallourec's value proposition. The transaction price of €14.64 per share will have implications for Vallourec's valuation metrics and could influence investor perception of the stock. This divestiture may also affect the liquidity and volatility of Vallourec's shares on the Euronext exchange.
Investors should consider the potential for Vallourec to leverage its improved financial structure to invest in new technologies and market opportunities, especially in the context of the energy transition. The exit of a major equity investor like Apollo could also lead to changes in Vallourec's capital allocation strategies and dividend policies, impacting shareholder returns.
The mention of Vallourec's opportunity to capture future growth in the energy transition markets is particularly noteworthy. Vallourec's focus on high-performance tubular products positions it well to benefit from the global shift towards renewable energy infrastructure, which often requires specialized materials. The acquisition by ArcelorMittal, a company with extensive resources, could provide Vallourec with additional capabilities to innovate and scale operations in this sector.
Stakeholders should evaluate how Vallourec's expertise in premium tubular steel products can be leveraged in emerging markets such as carbon capture and storage, hydrogen transport and geothermal energy. The transition of ownership may bring fresh capital and strategic focus to these areas, potentially leading to increased market share and enhanced shareholder value in the long run.
03/12/2024 - 06:21 PM
NEW YORK, March 12, 2024 (GLOBE NEWSWIRE) -- Apollo (NYSE: APO) today announced that Apollo-managed Funds (“Apollo Funds” or the “Funds”) have agreed to sell 65.2 million common equity shares in Vallourec SA (Euronext: VK; “Vallourec”, the “Company”), a value-added manufacturer of premium tubular steel products, for €14.64 per share to ArcelorMittal. The shares sold represent a 28.4% equity interest1 in Vallourec and a total transaction value of approximately €955 million , and upon close will mark the Apollo Funds’ exit of the investment.
“We’re proud of the extremely strong results achieved during our Funds’ ownership as the Company transformed its operations under a top leadership team led by Philippe Guillemot and established itself as a focused world leader in the manufacturing of high performance tubular products. Along with this business transformation have come record levels of profitability, a more sustainable competitive position and an opportunity to capture future growth in the energy transition markets,” said Apollo Partner Gareth Turner. “There is still considerable potential to expand upon what we have achieved but it is now appropriate for Apollo to transition our Funds’ shareholding to an industrial partner that can take the Company forward. We remain confident that Vallourec is well-positioned for long-term growth and we wish Philippe and the entire team continued success.”
Philippe Guillemot, Vallourec Chairman and CEO, said, “Apollo’s operational and capital markets expertise was instrumental to Vallourec’s turnaround, and we thank the Apollo team for their unfailing support and world-class partnership. With Apollo’s Funds’ assistance, we have fundamentally changed the operational and financial structure of Vallourec and we believe we are on the right trajectory to deliver enhanced shareholder value over the coming years.”
After leading the financial restructuring of Vallourec, Apollo Funds became the largest equity investor in Vallourec in 2021. As a strategic capital partner, Apollo played a pivotal role in the design, launch, and implementation of the “New Vallourec” plan in May 2022, which helped to transform the Company’s operational design, footprint and capabilities, and drove EBITDA from €258m m in 2020 prior to Apollo Funds’ investment to €1,196m m in 2023, reflecting the best results in nearly 15 years.
The transaction is expected to close in the second half of the year, subject to satisfaction of customary closing conditions.
About Apollo
Apollo is a high-growth, global alternative asset manager. In our asset management business, we seek to provide our clients excess return at every point along the risk-reward spectrum from investment grade to private equity with a focus on three investing strategies: yield, hybrid, and equity. For more than three decades, our investing expertise across our fully integrated platform has served the financial return needs of our clients and provided businesses with innovative capital solutions for growth. Through Athene, our retirement services business, we specialize in helping clients achieve financial security by providing a suite of retirement savings products and acting as a solutions provider to institutions. Our patient, creative, and knowledgeable approach to investing aligns our clients, businesses we invest in, our employees, and the communities we impact, to expand opportunity and achieve positive outcomes. As of December 31, 2023, Apollo had approximately $651 billion of assets under management. To learn more, please visit www.apollo.com .
Contacts
Noah GunnIR@apollo.com
Joanna RoseCommunications@apollo.com
1 Not taking into account preferred shares already issued but not vested as of today.
Apollo agreed to sell 65.2 million common equity shares in Vallourec SA.
Apollo agreed to sell the shares in Vallourec SA for €14.64 per share.
The total transaction value of the shares sold by Apollo in Vallourec SA is approximately €955 million.
The shares sold by Apollo represent a 28.4% equity interest in Vallourec SA.
ArcelorMittal will be acquiring the shares sold by Apollo in Vallourec SA.
