Metinvest says mulling purchase of Stelco

At the beginning of June, Stelco said they were looking for a buyer.

Late last week, this hit the news, but I didn’t get around to reporting it until this week.

Ukraine’s Metinvest confirmed on Friday that it is considering acquiring, or investing in, steelmaker Stelco Inc., but said it has made no firm decision.

Metinvest’s statement followed a report in the Globe and Mail newspaper, citing unnamed sources, that said officials from Metinvest have toured Stelco facilities in the weeks since the steel company put itself up for sale last month.

Stelco is the only big steelmaker in Canada that is still Canadian-owned.

The Globe’s Report on Business, in addition to reporting more or less the same content, had this interesting few paragraphs part way down their article:

Consolidation has swept aside Stelco’s neighbour Dofasco Inc., Essar’s deal for Algoma closed last month, and shareholders will vote on a $7.7-billion (U.S.) buyout of Ipsco Inc. by Svenskt Steel AB later this month.

Those transactions have helped reduce the number of mid-sized, relatively cheap North American steel assets to three.

They are Stelco, AK Steel Holding Corp. of Middletown, Ohio, and a mill near Baltimore, Md., that Mittal Arcelor, the world’s largest steel maker, has been ordered to sell by the U.S. government.

Of course, consolidation of steel suppliers means lack of competition on the supply side, and makes it very hard for small metal stampers to have a say in their own input costs.

Canadian Steel Maker Looks for Buyer

This would be the end of an era for Stelco. Friends of my family worked at Stelco going back to the ’60s.

NY Times

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companies, including Dofasco, Stelco remains independent, largely because it is unprofitable and some of its plants are outdated.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.

Stelco shares skyrocket as steel maker seeks buyer

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.

Stelco sale would be end of era for Canadian steel

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.

ThyssenKrupp Agrees to Buy Dofasco for C$5.26 Bln

It’s Deja Vue all over again.

No, I didn’t post an old article from a few days ago again by mistake.

This is *another* ThyssenKrupp offer to buy Dofasco, part of the Mittal Steel purchase of Arcelor …
ThyssenKrupp AG, four days after saying the purchase of Dofasco Inc. would be too costly, agreed to acquire the Canadian steelmaker for C$5.26 billion ($4.6 billion) as part of Mittal Steel Co.’s hostile bid for rival Arcelor SA.
Arcelor this month agreed to buy Dofasco for C$71 a share, beating an offer from ThyssenKrupp. Mittal today made an unsolicited bid of 18.6 billion euros ($22.7 billion) for Arcelor. If the attempt succeeds, Mittal will sell Dofasco to ThyssenKrupp for C$68 a share, ThyssenKrupp Chief Executive Officer Ekkehard Schulz told 4,600 investors at the company’s annual shareholder meeting in Bochum today.
The sale would be “a good deal” for ThyssenKrupp because it would help the company pursue “promising options in North America,” said Klaus Breil, who helps manage investments of $7.3 billion for Commerzbank AG in Frankfurt.
Shares of ThyssenKrupp in Frankfurt rose 1.64 euros, or 8.1 percent, to 21.95 euros, the biggest percentage increase since March 2000 and the highest price since May of that year. The stock has gained 25 percent this year, valuing the company at 11 billion euros.

ThyssenKrupp May Buy Other Assets After Ending Bid

It seems that ThyssenKrupp may go hunting elsewhere …

Who knew that we were in the “lucrative North American market”?
ThyssenKrupp AG, after bowing out of the bidding for Canadian steel producer Dofasco Inc., may seek to acquire other companies in North America to expand outside Europe, analysts said.
“This is not the last we’ve heard of ThyssenKrupp,” said Michelle Applebaum, an independent analyst […] who has followed the steel industry for almost 25 years.
ThyssenKrupp will collect a C$215 million breakup fee when its offer expires Jan. 26. The German company now may turn to other potential acquisitions, such as AK Steel Holding Corp., the biggest U.S. maker of automotive steel, or U.S. Steel Corp., the country’s largest producer, said Applebaum and Chuck Bradford, a steel analyst with Soleil Securities in New York.

Thyssen loses Dofasco but still aims to expand
International Herald Tribune
The German steel maker ThyssenKrupp said on Tuesday that it would seek new opportunities to expand in North America after it quit the bidding for the Canadian company Dofasco, which was acquired by another European giant, Arcelor, after a two-month takeover battle.

ThyssenKrupp’s chief executive, Ekkehard Schulz, said his company would consider building a new steel mill in North America, cooperating with other manufacturers or attempting a different acquisition.

ThyssenKrupp’s board will consider these options at a meeting in May, Schulz said. “It’s too early to call this a defeat,” he added.

Financial markets, which had punished ThyssenKrupp shares as the prospective price for Dofasco increased, cheered the company’s discipline in pulling back from the acquisition.

ThyssenKrupp late Monday said it would not top Arcelor’s bid of 71 Canadian dollars, or $61.67, per share. Schulz said on Tuesday that the bid was “not economically justifiable” above a price of 68 dollars per share. ThyssenKrupp stock closed up 54 cents at E19.26, or $23.66, in Frankfurt trading Tuesday.

Shares of Arcelor, which will pay 5.5 billion dollars for Dofasco, were up 70 cents at E21.61.

The wrangle over Dofasco highlighted how major industry players, notably Arcelor and Mittal Steel of the Netherlands, appear determined to bulk up in an effort to harness economies of scale and negotiate better prices with iron ore producers.

“The global consolidation process in the steel industry is continuing,” Schulz said.

For ThyssenKrupp, that means finding a stronger foothold in the lucrative North American market, he said.

Although American automakers including Ford and General Motors are slashing payrolls and production capacity to cut costs, selling automotive steel in what is still the world’s largest car market remains an attractive proposition. “Better times will come,” said Christian König, a ThyssenKrupp spokesman.

Dofasco terminates deal with ThyssenKrupp

Canadian steelmaker Dofasco said on Monday it agreed to terminate its agreement with ThyssenKrupp after the German industrial group waived its right to raise a C$68 per share bid for Dofasco to match a higher offer.

Arcelor agrees to buy Dofasco
Arcelor said on Tuesday it had agreed to acquire Dofasco for C$71 per share in a cash deal valuing the Canadian steel maker at C$5.6 billion.

Arcelor made the announcement in a joint statement with Dofasco after German rival ThyssenKrupp withdrew from the bidding war.

Questions linger after Dofasco bidding war
Toronto Star
Dofasco embraced a $5.5 billion takeover bid by Arcelor SA yesterday but questions remain about relations between the two companies after months spent fighting off the European steel giant’s advances.

After months of siding with Germany’s ThyssenKrupp, Dofasco CEO Don Pether put a positive spin on the Arcelor takeover.

“Certainly Dofasco’s management team is fully committed and excited about the opportunity this presents and committed to the success and sustainability of the organization going forward,” Pether told reporters on a conference call.

But Dofasco’s decision to draw ThyssenKrupp into the bidding fray as its white knight may result in some strained relationships with Arcelor, said Chuck Bradford, an analyst with New York’s Soleil Securities.

Canada’s Steel Center Seeks Stelco Buyout After Dofasco Deal Canada
Canada’s steel hub of Hamilton, Ontario, has plenty of reasons to watch the billion-dollar takeover battle for steelmaker Dofasco Inc. Workers at Stelco Inc. hope it’s a sign their employer, heading out of bankruptcy, will be next to draw buyer interest.
“It’d be a fresh start,” said Harry Fitzpatrick, 53, a carpenter for 30 years at Stelco. He boarded a bus in Hamilton this week to attend the company’s bankruptcy hearing at a Toronto court.
Stelco is ready to emerge from two years of bankruptcy protection in March, just as global steel producers such as Arcelor SA seek additional capacity to meet increasing demand from China and India. That puts it in a better position to be sold, says Peter Warrian, a senior fellow at the Munk Centre for International Studies at the University of Toronto.

ThyssenKrupp matches bid for steel rival
Germany�s ThyssenKrupp AG said Tuesday it raised its bid for the Canadian steelmaker Dofasco Inc. to $4.2 billion, matching the latest competing offer from steel rival Arcelor SA.
Both bidders are now offering 63 Canadian dollars ($54.23) per share, or a total of 4.88 billion Canadian dollars ($4.2 billion), in cash for Dofasco, which is a major supplier to U.S. automakers.