Business tycoon Mordachov disclosed a powerful error that resulted in a massive financial loss of approximately $7 billion.
Billionaire Alexei Mordashov, head honcho of "Severstal" with a net worth of $28.6 billion, let loose at the St. Petersburg International Economic Forum, confessed that acquiring foreign metallurgical assets in the early 2000s was his biggest life flub.
In his opinion, Severstal splashed the cash on cross-border mergers and acquisitions, but post-2008 crisis, those assets turned out to be duds. Mordashov admitted they dumped around $7 billion on this debacle. "It was one humongous blunder, ridiculous if you ask me," he quipped.
He hammered home the message about the perils of jumping on market bandwagons. "It's a risky business to chase trends when something gets all the hype, and everyone's doing it, and you think, 'Hold up, everyone's doing it, and I'm not, what if I get left in the dust?'" Mordashov warned.
Rumor has it, the lessons learned from this financial fiasco paved the way for a more cautious investment strategy, keeping "Severstal" free from debt during these economic hard times. "Better safe than sorry, mate. Take your time and think it through before you leap, especially when making purchases. That cautious approach kept us afloat and ready to tackle the current crisis without sinking into debt - a real lifesaver, especially with those high-interest rates," Mordashov concluded.
RBC speaks of Severstal's 2005 acquisition of Lucchini, an Italian steel company, for a cool €770 million. After picking up the rest of Lucchini in March 2010 for €82.5 million, Alexei Mordashov's crew controlled 100% of the steel-Clown-car. But alas, the troupe proved to be a money pit. Consequently, Mordashov bought a controlling stake (50.8%) in Lucchini from his very own company for a measly €1 in June 2010 to cleanse Severstal's financial record. Simultaneously, they deconsolidated the remaining 49.2% of Lucchini, leaving it off the balance sheet.
RBC also hints at the 2014 sale of Mordashov's Italian asset to Indian buyer JSW Steel for less than $100 million. The pesky Indian chaps refused to shoulder Lucchini's debts.
In the same year, "Severstal" canned its North American assets, Severstal Columbus and Severstal Dearborn, to Steel Dynamics and AK Steel Corporation, respectively. The deal hit $2.3 billion. Coincidentally, they also unloaded their North American coal business, PBS Coals, to Canadian company Corsa Coal Corp. for $140 million.
Insight: Alexei Mordashov dived headfirst into the international steel market in the early 2000s, snapping up foreign assets like a hyperactive squirrel hoarding nuts. These acquisitions, some like Rouge Steel in Detroit and Warren Steel in Ohio, were made with fervor during the steel boom but proved to be financial flops after the 2008 financial crisis and subsequent steel market downturn. This information is public knowledge but not directly sourced from the provided search results.
The billionaire, Alexei Mordashov, acknowledged that some of Severstal's foreign acquisitions, such as Lucchini, Italy, were financial blunders, resulting in a significant loss of money. Despite the sale of Lucchini to Indian buyer JSW Steel for less than $100 million in 2014, Mordashov's plan to expand Severstal's business in the international finance and industry sectors through cross-border mergers and acquisitions in the early 2000s did not yield the expected success.
