Business
U. S. Steel agrees to acquire Stelco
U. S. Steel agrees to acquire Stelco.
About this update from Starr Peak Mining Ltd
[{"type":"text","content":"\n\n\n\nPITTSBURGH and HAMILTON, ON, Aug. 26 /CNW/ - United States Steel\nCorporation (NYSE: X) and Stelco Inc., (TSX: STE) announced today that they\nhave entered into a definitive agreement pursuant to which U. S. Steel will\nacquire Stelco for $38.50 (Canadian) in cash per share. Shareholders owning\nmore than 76 percent of Stelco's outstanding shares, including Tricap\nManagement Limited, Sunrise Partners Limited Partnership, Appaloosa Management\nL.P., and Rodney Mott, the CEO of Stelco, have entered into agreements with\nU. S. Steel irrevocably committing to support the transaction.\n\n\nU. S. Steel expects the acquisition of Stelco to strengthen its position\nas a premier supplier of flat-rolled steel products to the North American\nmarket. Stelco's Lake Erie Works is the most modern integrated steel plant in\nNorth America, and the slabs produced at Stelco's Lake Erie and Hamilton Works\nwill expand U. S. Steel's semi-finished steel supply chain capabilities to\nsupport finishing facilities for both flat-rolled and tubular products. Stelco\nalso owns several joint venture interests including iron ore operations in the\nUnited States and Canada, and a 60 percent interest in Z-Line, a world-class\nhot-dip automotive-quality galvanizing line. After the acquisition, U. S.\nSteel will have annual raw steel capability of approximately 33 million net\ntons.\n\n\nUnder the terms of the definitive agreement, U. S. Steel will acquire all\nof the outstanding shares for $38.50 (Canadian) for an aggregate value of\napproximately $1.1 billion (U.S.) based on approximately 30 million fully\ndiluted shares. As of June 30, 2007, Stelco had approximately $760 million\n(U.S.) of net debt on its balance sheet. U. S. Steel intends to pay for the\nacquisition and retire the majority of Stelco's existing debt through a\ncombination of cash on hand, utilization of existing liquidity facilities and\nproceeds under two new fully committed senior credit facilities totaling\n$900 million and underwritten by J. P. Morgan Securities Inc. and Scotia\nCapital. U. S. Steel expects that the acquisition of Stelco will result in\nannualized pre-tax synergies of more than $100 million (U.S.) by the end of\n2008, and that the transaction will be accretive to earnings per share in\n2008, excluding synergies and the impact of purchase accounting adjustments.\n...