A Deeper Insight into ArcelorMittal’s Acquisition of Exosun

January 5th, 2018 by Trefis Team
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Arcelor Mittal

ArcelorMittal (NYSE:MT) in its news release announced the acquisition of Exosun, a leading French solar tracker manufacturer. The acquisition of Exosun marks ArcelorMittal’s expansion toward downstream solar operations which could remain beneficial for the company in the years to come.

Exosun is a manufacturer and developer of photovoltaic equipment and solar tracking systems who is currently in receivership. The company has been restructuring its operations and been looking for new financial partners for its business in 2017. As per Greentech Media (GTM) research, competition in the solar tracker business is fierce and downward price pressure is hurting the industry margins. The company’s CEO reiterated receivership as a choice made by the company in order to reposition it in its growth trajectory. Exosun’s 2016 share in the global PV tracker market share accounted for 1%, with significant potential for improvement.

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In such a scenario, ArcelorMittal’s acquisition of Exosun makes sense. The new entity created with the integration of the two companies would have access to the huge financial base of ArcelorMittal and hence provide an advantageous position to compete with the larger market players in the solar tracking industry. Coupled with financial flexibility, ArcelorMittal’s existing expertise in solar projects would benefit the new entity from commercial, industrial, and research and development (R&D) synergies.

ArcelorMittal’s current footprint in solar operations involves the manufacturing of steel solar frames in Europe, China, and Egypt and with its latest acquisition, the company would be in a fair position to expand its downstream solar operations.

In addition to the above positives of the acquisition, a favorable business condition for solar energy would remain beneficial to both the companies. The International Energy Agency (IEA) expects renewable energy to constitute 40% of total power generation by 2040 and solar will become the largest source of this low-carbon capacity. Most of the replacement would be driven by the structural change initiated in China which is currently in a fight against its alarming levels of pollution.

Thus, in such a context, ArcelorMittal’s acquisition of Exosun would pan out well for both the companies. Financial details regarding the deal have not been disclosed and we shall watch closely as these details are communicated.

We have a price estimate of $28 for ArcelorMittal which is below the market price.

Have more questions about ArcelorMittal? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for ArcelorMittal

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