Nucor offers C$1.25bn for Harris

Nucor, the North Carolina-based steelmaker, has made an agreed C$1.25bn (US$1.1bn) offer for Harris Steel of Toronto, underlining the integration of the US and Canadian steel industries.

Nucor’s chief executive Dan DiMicco said on Tuesday that Harris provided Nucor with “immediate and broad geographical reach and with considerable scale and growth opportunities”.

Harris, which is family controlled, has a sizeable presence in North American steel fabrication and distribution, and owns 75 per cent of Novosteel, a global steel trader.

Nucor bought a chunk of the Canadian company’s US operations in 2004.

One analyst said that Nucor’s offer of C$46.25 per share for Harris put a higher value on the Canadian company than Nucor’s earlier acquisitions.

However, Harris, with annual revenues of US$1.2bn, is about one-tenth the size of Nucor so that, according to the analyst, the purchase will have little impact on Nucor’s market valuation.

Canada’s steel industry has increasingly operated on a continent-wide basis, with mills and distribution networks on both sides of the border.

The Nucor-Harris deal also marks another milestone in the consolidation of the region’s steel industry, which has also included a string of foreign acquisitions. Russia’s Evraz is in the throes of taking over Oregon Steel Mills in a US$2.3bn deal.

Arcelor, now part of Arcelor Mittal, bought Canada’s Dofasco earlier in the year. ThyssenKrupp of Germany has begun legal action, alleging that Arcelor Mittal had promised to sell Dofasco as part of the Arcelor-Mittal Steel merger.

Nucor expects that 2006 will be its third consecutive year of record earnings and production. But it cautioned last month that fourth-quarter profits would be lower than expected due to weak spot steel prices, record imports of finished steel and high domestic inventories.

On the other hand, prices for scrap, which makes up a high proportion of Nucor’s raw material costs, have remained unexpectedly high.

The company estimated that fourth-quarter shipments would be 12-15 per cent lower than the previous three months.

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