ArcelorMittal Shows Its Serious About Self-Improvement With The Sale Of Its U.S. Operations

ArcelorMittal (MT) management has been trying to convince the Street for some time that it is serious about changing how it operates – instead of trying to bigger, management is focusing far more on being better, with a much greater focus on long-term capital returns from assets. Most have been skeptical about this, including me, as there seems to be one oddly questionable decision made by management to offset every good decision.

With the Monday announcement of ArcelorMittal’s intent to sell its U.S. operations to Cleveland-Cliffs (CLF) in a cash and equity deal, I believe ArcelorMittal management has taken a very big step toward showing that it is serious. I believe the company is getting good value for suboptimal assets in a difficult market, and I like how it backs up the general idea that management is now more focused on the long-term capital returns of the business.

I was lukewarm on ArcelorMittal back in August, as I didn’t like the company’s position as a less-than-great player in a market that I believe is not going to see a lot of pricing strength. The shares have since lagged names I preferred more (including Steel Dynamics (STLD) and Ternium (TX)), but if the indicated pre-market pop holds up, that ArcelorMittal’s relative performance will have improved meaningfully. It still won’t be my preferred name, but it’s harder to stick with a bearish argument regarding management’s vision and discipline toward making this a better steel company for the long term.

 

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ArcelorMittal Shows Its Serious About Self-Improvement With The Sale Of Its U.S. Operations