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U.S. Steel to pay $750-million for bankrupt National Steel©Associated PressJanuary 10, 2003 PITTSBURGH -- U.S. Steel Corp., the nation's largest steelmaker, said Thursday it will buy bankrupt National Steel Corp. for about $750-million. Under a deal expected to close early in the second quarter, U.S. Steel would assume about $200-million of the smaller company's debt. The purchase will include up to $100-million in common stock and the balance in cash. If the deal is completed, U.S. Steel would increase its production capabilities to about 25-million tons of raw steel annually, bumping the company up from being the world's 11th largest producer to No. 5, the company said. It is the second such consolidation in the domestic steel industry announced this week. International Steel Group made a $1.5-billion offer for bankrupt Bethlehem Steel Corp. on Monday. Though U.S. Steel acquired an option to buy National Steel from Japan's NKK Corp. early last year, talks faltered when National Steel sought Chapter 11 bankruptcy protection in March. Industry experts said U.S. Steel may have felt pressure to make an offer sooner rather than later for National, but company officials said the decision was made in late December. Analysts said there was no single reason steelmakers went forward this week with consolidation efforts, but there had been some grumbling that domestic producers were not moving quickly enough after tariffs were put in place by President Bush in March. Thomas J. Usher, chairman of U.S. Steel, said the tariffs were part of the reason the deal became a reality. "If the president had not taken bold action, you would have found the industry so decimated that deals of this type would have been very difficult," he said. In trading on the New York Stock Exchange, U.S. Steel shares closed up 72 cents at $13.70 on Thursday, a gain of more than 5 percent. "It looks like consolidation and rationalization has finally started," said Lloyd T. O'Carroll, an analyst with BB&T Capital Markets. National Steel, of Mishawaka, Ind., had $2.5-billion in sales in 2001. The company employs about 8,200 people and ships about 6-million tons of steel annually. Bringing National Steel into the fold could increase U.S. Steel's production by up to 40 percent and the company expects a combined annual cost savings of about $170-million within two years of purchase. Pivotal to the deal is an agreement with the United Steelworkers of America. The union contract with National Steel is set to expire in 2004. The United Steelworkers union reacted positively to the announcement Thursday, saying the workers would continue to play a role in the merger talks. "We have been strong advocates for consolidation for a long time," union President Leo W. Gerard said.
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From the Times Business report
From the AP
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