Europe’s Arcelor increases offer to $4.9B for Canadian steelmaker Dofasco

Yahoo! News

Arcelor said it will offer $63 a share, or $4.9 billion, trumping the friendly $61.50-per-share bid Dofasco’s executives arranged with German steel conglomerate ThyssenKrupp AG.

On Friday, investors placed bets that there are more bouts to come, driving Dofasco’s stock (TSX:DFS – news) up 90 cents to $64.80 – above the latest offer.

Arcelor said its proposal will be mailed to Dofasco’s shareholders in coming days.

The Hamilton-based steelmaker’s only response was that “when and if such an offer is made,” its board will consider it.

In a statement on its website, ThyssenKrupp said it has taken note of Arcelor’s announcement and will review the bid before deciding on how to proceed.

Steel Companies are now the Darlings of the Stock Market

An interesting article out of England about the little steel company just down the road from us in Hamilton.

MEPS STEEL NEWS

The current bidding by several contending parties to buy the Canadian steel producer Dofasco has highlighted the extraordinary turnaround in the value of steel company assets in the last couple of years.

Aside from privatisations, where special circumstances apply, it is hard to recall the last time that a steel company was the subject of a bidding battle between rivals anxious to grab its business and assets for itself. During the decades when steelmakers struggled to provide investors with a return on their capital, such takeover wars were rare.

Most recent steel company fusions […] have been agreed deals, not contested takeovers.

Steel company amalgamations like these were usually based on cost-cutting and finding synergies. Industry executives were looking for ways to rationalise in order to reduce inefficiencies. Such mergers often led to plant closures, capacity reductions and serious job losses.

Now things have changed. Dofasco is part of other companies’ expansion plans. ThyssenKrupp and Arcelor are both increasing their production of slabs at low-cost locations in Brazil, and they need Dofasco as a captive consumer.

ThyssenKrupp makes Dofasco bid

You may remember that last week Arcelor made an unsolicited bid for Dofasco. By the way, if you had shares in Dofasco, you’re doing well today. From just under 45 a week ago to just under 64 today (above the ThyssenKrupp offer).

Financial News – Yahoo! Finance

ThyssenKrupp, Germany’s biggest steelmaker, said it would offer C$61.50 per share of Dofasco.

The deal, which had been unanimously recommended by the board of Dofasco, was expected to close before the end of the first quarter of 2006, ThyssenKrupp said in a statement.

ThyssenKrupp said its offer represented a 9.8 percent premium over Arcelor’s bid for Dofasco on November 23. Luxembourg-based Arcelor, which is the world’s second-biggest steelmaker, had offered C$56 per share.

European steel maker Arcelor launches bid for Dofasco

CTV.ca

Europe’s number one steel producer Arcelor S.A. has launched a hostile bid worth $4.3 billion for Canada’s biggest steelmaker by revenue, Dofasco Inc.

The European steel company announced early Tuesday that it is offering $56 per share, all cash, for Hamilton, Ont.-based Dofasco’s 77.4 million outstanding common shares.

That represents a premium of 27.3 per cent over Tuesday’s closing price of $44.

Stelco creditors vote on the firm’s restructuring plan Monday

Perhaps I should have called this article “As the Stelco Turns”.

Down the road from us about an hour and a half is Hamilton, home to two large steel companies Stelco and Dofasco and a bunch of subsidiaries. It’s pretty much a steel town. As is Buffalo, about another hour south of Hamilton. When I was a kid growing up in Toronto, they taught us in school that Hamilton and Buffalo were large steel towns situated where they are because of access to the great lakes, to bring the coal and the iron ore in and the finished steel to market. Seems irrelevant these days, but I guess once a place gets set up as a steel town, it kinda sticks.

Dofasco pulled itself out of bankruptcy (eventually – it took some significant work). Stelco is trying to do the same. But this is like the Algoma story I did a while ago … I’m not sure that the stock market is good for long term investment companies like steel and aluminum mills.

Basically, everyone is scrabbling over Stelco at the moment because steel prices are high. Everyone (the unions, the creditors, probably the board too) wants a piece of the current, fleeting prosperity. But it would be wiser to pay down debts with the money and put the house in order if Stelco is to survive beyond the current steel bubble (which is going to burst sooner or later, probably sooner). But shareholders, and even bond holders, don’t seem to know (or even care) about the steel marketplace …

National Post online
After nearly two years of bankruptcy protection for Stelco Inc.. the insolvent steelmaker’s creditors are expected to vote on the company’s restructuring plan Monday.
The Hamilton-based steelmaker is labouring to pull itself out from 22 months of bankruptcy protection.
After more than a year and a half of fighting with workers and creditors, it circulated a plan earlier this fall detailing how it intends to refinance and emerge as a new company.
On Tuesday, its creditors gathered at a Mississauga, Ont., conference centre to finally cast their ballot on Stelco’s plan. But chief executive Courtney Pratt was forced to apologize as he told them the meeting was being cancelled.
The steelmaker’s bondholders were going to vote the plan down, despite negotiations that stretched right up until the last minute.
Rather than allow that, Stelco decided to postpone the vote until 9 a.m. Nov. 21.

Update later on Monday

Stelco Inc. announced today that the meeting of its creditors to consider and vote upon a restructuring plan has been further adjourned until Wednesday, November 23, 2005. The Company indicated that the meetings of creditors of its subsidiaries will also be adjourned to the same date.

At the first of the meetings scheduled to take place today, the Company recommended to the Court-appointed Monitor that an adjournment was appropriate so that intensive negotiations among stakeholders can continue and so that a plan can be filed and circulated prior to a vote on Wednesday. The Monitor then exercised its discretion and allowed the adjournment.

Dofasco profit falls 95 pct on weaker prices

These guys are about an hour away from us here in Toronto, so we follow them a little more closely than we do other steel companies.

Reuters.com

Steelmaker Dofasco Inc. said on Monday its third-quarter profit slumped 95 percent, much lower than analysts expected, dragged down by weaker steel prices and a stronger Canadian dollar.

Dofasco to buy Quebec Cartier Mining

It’s very interesting … of the major canadian steel mills, Dofasco has emerged healthy after going through a round of bankrupcy stuff. Mostly you hear from them only when they’re doing good stuff.

Now Stelco, just down the road from us in Hamilton, on the other hand, you hear from every other day getting into a fistfight with their union publicly and splatted across several web sites. In fact, the supervising judge for the bankrupcy had to discipline them both at one point, saying something to the effect that he doubted either one was really operating in good faith.

Reuters.com
TORONTO, June 9 (Reuters) – Dofasco Inc. plans to acquire most of the remaining interest that it does not already own in Quebec Cartier Mining Company for C$306 million ($245 million), and may spin off the unit, Canada’s second-biggest steelmaker said on Thursday.

“Given the rapid change in global iron ore markets and the pricing outlook, it will be prudent for Dofasco to hold equity in QCM at a level sufficient to hedge our iron ore purchases,” Pether said in a statement.

QCM produces iron ore products in Quebec and operates an open pit mine, crusher/concentrator facility, pellet plant, deep-water harbor and a railway linking the mine to the harbor on Quebec’s North Shore region.

The announcement conference call is happening even as we speak, and the stock has already risen 7% on the morning, so something good must be happening there!

[It’s now 9PM EST and the stock rose a total of 10.6% on the day]

Stelco, Algoma, Dofasco face increased costs as steel market shifts: DBRS

CP via Yahoo! News

TORONTO (CP) – Canadian steel giants Stelco Inc., Algoma Steel Inc. and, to a lesser extent, Dofasco Inc. will all see their margins pressured through the rest of this year by rising input costs and steel prices that have fallen off cyclical peaks, according to a new report on the sector.

Dominion Bond Rating Service said the impact of rising iron ore and coal costs will be “most notable” at the three integrated steel producers through the remainder of 2005, given their exposure to those commodities.

Stelco and Algoma use significant amounts of coal in their blast furnaces during the steelmaking process. Dofasco is less sensitive to iron ore and coal price shifts given that they use more natural gas in their manufacturing processes.

The higher input costs come as steel prices have fallen from 2004 highs posted last fall.

But weaker industrial demand, increased exports from China and high inventory levels have contributed to a steady decline in benchmark U.S. flat-rolled steel prices, according to DBRS steel sector analyst Jarrett Bilous. Flat-rolled steel prices are now 35 per cent below August 2004 levels, reflecting a market correction, Bilous said.

Industry observers have said steel prices are now well below $540 US per ton, compared to $640 US per ton at the beginning of this year. Current prices will likely remain stable through the rest of this year, Bilous said.