Wednesday, July 11, 2007
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.
Saturday, June 02, 2007
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companies, including Dofasco, Stelco remains independent, largely because it is unprofitable and some of its plants are outdated.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.
Monday, November 13, 2006
A plan by Arcelor Mittal to sell Canadian steel producer Dofasco to ThyssenKrupp of Germany has hit a stumbling block, the world's biggest steel group has said.
Seems there's a poison pill in place.
Friday, January 27, 2006
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.
Mittal Steel moved to strengthen its grip on the global steel industry with a $23 billion hostile bid for main rival Arcelor in a deal that would also hand Canada's Dofasco Inc. to ThyssenKrupp.
Wednesday, January 25, 2006
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 KĂ¶nig, a ThyssenKrupp spokesman.
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
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.
Monday, January 23, 2006
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.
Monday, January 16, 2006
Arcelor, the world's second biggest steel maker, said on Monday it planned to raise its offer for Dofasco to 71 Canadian dollars per share, after rival bidder Germany's ThyssenKrupp had increased its offer to C$68 to value the Canadian steel maker at C$5.3 billion ($4.6 billion).
Wednesday, January 04, 2006
Germanyďż˝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.
Tuesday, January 03, 2006
Saturday, December 24, 2005
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.
Thursday, December 22, 2005
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 companiesâ€™ 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.
Monday, November 28, 2005
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.
Friday, November 25, 2005
Dofasco Inc. shareholders are betting Canada's largest and most consistently profitable steelmaker will draw another suitor to top a $4.3-billion unsolicited bid from Arcelor SA
Wednesday, November 23, 2005
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.
Monday, November 21, 2005
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.
Monday, October 31, 2005
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.
Thursday, June 09, 2005
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.
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]
Tuesday, June 07, 2005
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.
Sunday, December 12, 2004
How Steel is Made
Dofasco, a local steel supplier just an hour down the road from us, has this interactive guide to how they make steel.
UK Steel has an excellent set of 4 flow diagrams and corresponding text descriptions. They talk about how the steel is made and common uses for the resulting steel.
[updated] here are the articles I promised earlier in the week:
- Steel.org (American Iron & Steel Institute) How steel is made (quite a series of articles. If you're a visual person, like me, some of these articles are long on words and short on diagrams, but others are easier on the eyes)
- Key-to-Steel.com has this article on Steel Making Processes
- Steelprofiles.com How Steel is Made article (certain parts of this web site are off limits unless you subscribe ... )
- IISI (International Iron & Steel Institute) worldsteel.org intro to steel in a question and answer format
Some things I learned:
- Blast furnaces have been around since the 14th century.
- The hot air blown in the bottom of the furnace (the "blast") takes 6-8 seconds to get to the top(!)
- The raw materials dumped in the top take 6-8 hours to descend to the bottom (probably fighting all that rising hot air going the other way).
- 70% of the steels used in automotive production today did not exist 10 years ago
Here's an amusing article about a university professor making microwave steel using 6 microwave ovens he bought at WalMart.
Tuesday, July 13, 2004
'Because we have committed purchases and secure supply from other mining properties in which Stelco holds an ownership interest, our steel production should not be affected through the balance of 2004,' said Stelco Chief Operating Officer, Colin Osborne."
'The quarter's results will be better than expected as a result of continued strengthening in the pricing environment and continued very high market demand at both our Hamilton operations and at Gallatin Steel,' Dofasco president and CEO Don Pether said in a statement. "