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Steelmaker Nucor bids $1.07 billion for Harris

January 03, 2007|From the Associated Press

CHARLOTTE, N.C. — Steel products maker Nucor Corp. offered $1.07 billion in cash Tuesday for Canada's Harris Steel Group Inc., the latest move for the steelmaker in the quickly consolidating industry.

"Basically, we have seen ongoing consolidation over the past several years, and really the expectations are to see that continuing as we go forward," said Nancy Gravatt, spokeswoman for the American Iron and Steel Institute, a Washington, D.C.-based trade organization that represents more than 30 U.S. steel companies, including Charlotte, N.C.-based Nucor.

"Resulting is a smaller but healthier group of companies" that are better suited to serve their customers' needs, she said.

Steel companies announced a spate of deals last year, highlighted by Arcelor's accepting Mittal Steel Co.'s proposal to create a titan with nearly 10% of the global market.

The consolidation fervor helped overshadow concerns about weaker demand from the housing and auto sectors, as well as a potential inventory glut and falling prices. But despite the declining prices for their products, steelmaker shares ended the year on a run as speculation about further consolidation in the globally fragmented industry persisted.

Nucor shares closed Friday at $54.66. The NYSE was closed Tuesday for the funeral of former President Ford.

Nucor, which makes steel from recycled metal at its "minimill" operations across the United States, said the Harris Steel deal would broaden its geographic reach and give it opportunities to grow.

Nucor has grown significantly since Daniel R. DiMicco became chief executive in 2000. The company has bought 16 plants and is looking at expansion and construction opportunities, most recently announcing plans to expand operations in Memphis, Tenn.

"We purchase when we think it makes sense to purchase. We expand and build at other times," said Hamilton Lott, an executive vice president for Nucor. "We continue to leave both options open."

Nucor is offering 46.25 Canadian dollars ($39.69) for each Harris Steel share, a 6% premium over Harris' closing price of 43.49 Canadian dollars ($37.32) on Friday.

Nucor said Harris Steel's board of directors has unanimously recommended that stockholders tender their shares.

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