updated 12/20/2006 10:39:54 AM ET 2006-12-20T15:39:54

Arcelor and Mittal, which are in the process of combining to form the world's biggest steelmaker, announced Wednesday they have bought Mexico's Sicartsa from Grupo Villacero for $1.44 billion.

The deal includes the acquisition of Vinton, Texas-based mini-mill Border Steel Inc., as well as an integrated steel-making plant, a mini-mill and two rolling mills in Mexico.

The companies said the combination of the two forces in Mexico would lead to the creation of Mexico's largest steel producer with an annual capacity of 6.7 million tons.

"With the Mexican market expected to grow by up to 6 percent per year over the next 10 years, this is the ideal time to expand our presence in this country," said Arcelor Mittal CFO Aditya Mittal. "We see significant potential for improving the profitability of Sicartsa."

Mittal Steel Co. NV is in the process of completing its $33.4 billion acquisition of Arcelor SA. The combination, due to be completed by April or May, will create a titan with close to 10 percent of global steel production. The company will be called Arcelor Mittal.

Besides the acquisition of Sicartsa, Arcelor Mittal also entered a 50-50 joint venture with Grupo Villacero to distribute and trade its long steel products in Mexico and the southwest of the United States.

The company said its first acquisition since the announcement of the combination would lead to $130 million in cost savings.

In 2004, Sicartsa had revenue of $956 million, but its sales were hindered by a strike that stalled production for 46 days in 2005 and for four months of this year. Border Steel had 2005 sales of $110.8 million.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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