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U.S. Steel to Buy Stelco for About $1.1 Billion

U.S. Steel is to acquire Stelco for about $1.1 billion to strengthen its position as a supplier of flat-rolled steel products in North America, the companies said.

U.S. Steel will acquire Stelco for C$38.50 ($36.64) per share, amounting to about $1.1 billion, based on about 30 million fully diluted shares, they said.

Ontario-based Stelco had about $760 million of net debt on its balance sheet as of June 30, they said.

The companies announced the deal late on Sunday night.

Shareholders owning more than 76 percent of Stelco's outstanding shares have entered into agreements with U.S. Steel committing to support the deal, the companies said.

The slabs produced at Stelco's Lake Erie and Hamilton Works will expand U.S. Steel's semi-finished steel supply chain capabilities to support finishing facilities for both flat-rolled and tubular products, the companies said.

Stelco also owns several joint venture interests including iron ore operations in the United States and Canada.

Pittsburgh-based U.S. Steel will have annual raw steel capability of about 33 million net tons after the deal, according to the companies.

U.S. Steel expects the deal, expected to close before the end of 2007, will result in annualized pre-tax synergies of more than $100 million by the end of 2008. It also expects the transaction will boost earnings per share in 2008, excluding synergies and the impact of purchase accounting adjustments.

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