ArcelorMittal, the world’s largest steel producer, is analyzing the sale of a construction business as it divest into peripheral operations, sources familiar with the matter said.
The company works with consultants to prepare an auction for the division, which manufactures products that include roofing panels.
The business could reach US $771 million, according to the information provided by the sources, who requested not to be identified because the discussions are private.
The sale is likely to start in the fourth quarter and could attract interest from both producers of construction materials and private equity companies.
ArcelorMittal rebounded up to 3.3% on the Amsterdam stock exchange on Wednesday, reaching its highest level since July.
The company announced in August that it has the potential to unlock US $2 billion from its portfolio over the next two years, with non-core units such as airplanes.
The company’s executive director, Lakshmi Mittal, said last month that the demand for steel could weaken more than expected, while profits would be affected by lower prices and higher raw material costs.
A representative of ArcelorMittal declined to comment.
The plan to sell a non-essential asset is positive, since “it shows a renewed parameter in reducing debt to target levels,” said Christian Georges, an analyst at Société Générale SA.
Investors observe the metric closely since the company has said it would increase dividends after meeting the goal of net loans of US $7 billion, below the US $10.2 billion it had at the end of June.
The company said last month that it would “prioritize debt reduction,” even in the midst of difficult steel market conditions.