USS’ shopping spree is not over yet

Oct 01, 2007 | 02:18 PM |

U.S. Steel Corp., Pittsburgh, has shelled out more than $3 billion to acquire two steel producers operating in different markets.

Its plans for Lone Star Technologies Inc., Dallas, are clear, given that company's presence in the booming energy market. The $2.1-billion Lone Star purchase was closed in June. Its plans for Stelco Inc., Hamilton, Ontario, are somewhat less clear. The $1.1-billion deal to acquire Stelco was reached in late August.

Stelco emerged from protection under the Companies Creditors' Arrangement Act (CCAA), the Canadian equivalent of U.S. Chapter 11 bankruptcy protection, in April 2006. Shortly thereafter, Rodney Mott, new chief executive officer, launched a complete restructuring followed by a comprehensive strategic review of the entire company.

The idea was to make Stelco part of a larger operation. Mott had seen first-hand the inclusion of Dofasco Inc., Hamilton, in the merger of Mittal Steel Co. NV and Arcelor SA. He also was aware that nearby Algoma Steel Inc., Sault Ste. Marie, Ontario, was beginning its own strategic review and courting potential buyers. When Algoma was acquired by India's Essar Global Ltd. earlier this year, Stelco was left as Canada's only independent integrated steelmaker. Mott turned what some might have viewed as a disadvantage in his favor.....

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