Stelco stock surges as company puts out 'for sale' sign
Shares of Stelco Inc., the last Canadian-owned steel maker, surged more than 18 per cent on Fridayafter the companyconfirmed it is in early talks that could lead toits sale.
The Hamilton company said it is conducting a strategicreview "in light of the ongoing consolidation in the steel industry."
"We believe it is appropriate to begin the next phase of our business plan and explore all potential alternatives for positioning Stelco to be an integral part of a larger, globally competitive company," stated Rodney Mott, Stelco's president and CEO, in a release.
Stelco did not name the parties it is talking to, but said negotiations were at a very preliminary stage.
In the wake of the announcement, Stelco shares gained $5.03 to hit $31.93 on the TSX.
Shares of Stelco hit a 52-week high of $35.90 in April amid the wave of consolidation.
In recent months, Algoma Steel Inc. agreed to be taken over by India's Essar Global Ltd. in a deal worth $1.86 billion, and Ipsco Inc. agreed to be acquired by Sweden's SSAB Svenskt Stal AB in an $8.5-billion deal. Dofasco was acquired in 2006 by Arcelor, which was then taken over by Mittal Steel.
| Canadian steel company takeovers | ||
|---|---|---|
| Company | Buyer | Price |
| Algoma Steel | Essar Global (India) | $1.86B |
| IPSCO | SSAB (Sweden) | $8.5B |
| Dofasco | Arcelor/Mittal (Luxembourg) | $4.9B |
| Harris Steel | Nucor (USA) | $1.25B |
| Co-Steel | Gerdau (Brazil) | $600M |
Stelco emerged from creditor protection at the end of March 2006after a 26-month restructuring.
Toronto-based Brookfield Asset Management Inc., which owns about 36 per cent of the company, and Appaloosa Management, a U.S. hedge fund that owns 18 per cent, are apparently looking to sell out, the Globe and Mail reported Friday, citing unnamed sources.