Nucor buys firm for $1.07b
Steel deal is latest of wave in industry
CHARLOTTE, N.C. -- Steel products maker Nucor Corp. agreed to acquire Canada's Harris Steel Group Inc. yesterday for $1.07 billion, the latest in a string of acquisitions for the steelmaker and 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-based trade organization that represents more than 30 US steel companies, including Charlotte-based Nucor.
Steel companies disclosed a spate of deals last year, highlighted by Arcelor SA accepting Mittal Steel Co.'s proposal to create a titan with nearly 10 percent of the global market.
The consolidation fervor helped overshadow concerns about weaker demand from the housing and auto sectors, and a potential inventory glut and falling prices.
But despite the declining prices for their products, steel maker shares ended the year on a run as speculation of more consolidation in the globally fragmented industry continues to drive shares.
Nucor shares closed Friday at $54.66 on the New York Stock Exchange. The NYSE was closed yesterday for the funeral of former President Gerald R. Ford.
The news didn't shock many analysts. Toronto-based Harris Steel said last month it had entered into third party talks over a potential sale of the company.
"In general, it doesn't surprise me that a US company is buying a Canadian company," said John Anton, director of steel service at Global Insight in Washington. "I think there will be more purchases. The Canadian mills are right for foreign ownership."
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.
The move is the latest for Nucor, which has grown significantly since Daniel R. DiMicco became chief executive in 2000. Since then, the company has bought 16 plants and is looking at expansion and construction opportunities, most recently revealing plans to expand operations in Memphis.
The two firms already have a partnership dating to 2004, when Nucor paid $21 million to for a 50 percent stake in Harris Steel's 11 US reinforcing steel products operations.