This would be the end of an era for Stelco. Friends of my family worked at Stelco going back to the ’60s.
Stelco, Canada’s last domestically owned steel maker, said Friday that it was in early talks that might lead to its sale.
While foreign buyers have gradually taken control of Canada’s other steel companies, including Dofasco, Stelco remains independent, largely because it is unprofitable and some of its plants are outdated. Stelco emerged from a prolonged period of bankruptcy restructuring in March 2006 burdened with debt and pension obligations.
The Toronto Star
Stelco Inc. shares shot up yesterday after the money-losing steel giant revealed it is looking at a possible sale or partnership after almost a century as a Canadian industrial icon.
The company’s shares soared $5.03 – or more than 18 per cent – to $31.93 on heavy trading volume on the Toronto Stock Exchange, as investors bet on potential suitors pushing up the company’s value.
Reuters via Yahoo
The Canadian steel industry, which has been thinned by a slew of foreign takeovers, could lose its last big domestic-owned steelmaker after Stelco Inc. put itself on the auction block on Friday.
But Stelco’s confirmation that it has put itself up for sale did not come as a surprise given a rapidly consolidating global steel industry that has seen big foreign companies feast on Canadian steelmakers.
“Stelco, in a Canadian context, was the last man on the block,” said Randy Cousins, an analyst at BMO Capital Markets. “So is it a surprise that we are seeing this announcement? Not at all. It’s just a continuation of what’s been going on.”
Here is the official announcement, off the Stelco website.
HAMILTON, ON, Jun 1, 2007 (Canada NewsWire via COMTEX News Network) — Stelco Inc. (TSX: STE) today confirmed that it is reviewing strategic options for the company in light of the ongoing consolidation in the steel industry. The company has appointed a special committee of directors and CIBC World Markets and UBS to assist it in this review. The company intends to evaluate a broad range of possible alternatives including mergers, strategic partnerships, acquisitions or a sale of all or part of the company.
Discussions regarding these alternatives with third parties are at a very preliminary stage and there have been no discussions on the material terms of any transaction.
There’s a lot more, but that’s the gist of it.