1 Buyers line up for Algoma Steel.It's not a matter of if Algoma Steel ''See also Algoma (Disambiguation) Algoma Steel Corporation (TSX: AGA) was founded in 1902 by Francis Clergue, an American entrepreneur who had settled in Sault Ste. Marie, Ontario. will be acquired, but when. [ILLUSTRATION OMITTED] After surviving two bankruptcies within a decade, the former whipping boy whipping boy surrogate sufferer for delinquent prince. [Eur. Hist.: Brewer Note-Book, 942] See : Substitution of the Canadian steel industry is now considered one of most attractive takeover targets in a worldwide consolidation frenzy. The debt-free and cash-rich Sault Ste. Marie Sault Sainte Marie — pronounced "Soo Saint Marie" (IPA /su seɪnt məˈɹi/) — is the name of two cities on the Saint Marys River, which forms part of the boundary between the United States and Canada. company has been a hot topic for more than a year among industry analysts as a prime takeover target by a slew of potential suitors that include United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Steel Corp., Luxembourg's Arcelor Mittal  It has been suggested that and be merged into this article or section. , Germany's ThyssenKrupp AG,
Argentinian multi-national Techint Group, Russian steel maker Severstal
and Brazil's CVRD CVRD Companhia Vale do Rio Doce (Brazilian mining company)CVRD Cowichan Valley Regional District (Vacouver Island, British Columbia, Canada) CVRD Converter, Variable Resistance, to DC Voltage , the new owner of Inco. Foreign steel producers are looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. ways to enter the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. steel market to avoid trade duties on steel imported from offshore. In a conference call to analysts in January, Algoma President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Denis Denis, king of Portugal: see Diniz. Turcotte refrained from commenting on any speculation about potential suitors. Turcotte said there are no plans to sell the business which is focused on reinvesting in leading edge production technology and global alliances. However, the 105-year-old company is entertaining offers. After private talks with Germany's second largest steelmaker, Salzgitter AG fell apart in mid-March, Algoma officials acknowledged the company was in preliminary talks with about a half dozen other suitors. Algoma spokesperson Brenda Stenta has downplayed acquisition talks. "Despite this approach, there's no assurance that any agreement will result from it or any transaction will be completed. At this point in time, it's business as usual." The company rolled to a strong finish in 2006 posting fourth quarter net results of $50.4 million on the way to wrapping up a strong 2006 financial performance. The company's year-end earnings of $221.8-million was the third most profitable year in the company's history. Most of the company's 2.42 million tonnes of steel shipped last year was hot rolled sheet used by auto makers including Ford Motor Company and General Motors Corp. In their fourth quarter statement, the company remains "cautiously optimistic" going into 2007 which will be partially impacted by North American economic conditions in the auto, heavy machinery, housing and non-residential construction sectors, as well as imported steel. Peter Warrian, a leading steel industry analysts at the University of Toronto's Munk Centre for International Studies The Munk Centre for International Studies, part of the University of Trinity College, a federated college of the University of Toronto, is devoted to the study of numerous issues of international significance. , says what makes Algoma an attractive target is that it's a low cost producer, has plenty of cash with a high rate of profit, earning about $100 per tonne, while its Canadian rival Stelco is losing $40 per tonne. Algoma is one of the world's most efficient steel producers thanks to a modern $440-million rolling mill, a cost-cutting strategy and a surge in steel prices in recent years. "However they need new markets and products for the future," says Warrian Just about every independent Canadian steel producer is in play for acquisition, says Warrian, including Stelco and Ipsco. "They will all be consolidated into multi-national steel producers over time," similar to last year's mining mega-merger. "The ultimate driver is technology flows which are driven by international alliances." But there are also "soft" factors involved as well, Warrian says. "Locational advantages are crucial," as well as value-added activity, the quality of local institutions like civic leadership, education, infrastructure and health care to attract and retain skilled trades and management expertise. Algoma's geographic distance from major markets has been considered a drawback in the past, but Warrian says the transportation cost disadvantage is small. "Their productivity advantage is much greater than that." The company put itself on the selling block twice in 2005 and 2006, before abandoning the idea. The company also briefly considered buying troubled Hamilton steel producer Stelco in 2004. Other recent acquisitions of Canadian steel mills include Arcelor's $5.6 billion purchase of Hamilton's Dofasco last year and the Harris Steel Group by Nucor Corporation for $1.25 billion. QUICK FACTS Algoma Steel Inc. Head Office: Sault Ste. Marie Founded: 1902 CEO: Denis Turcotte Employees: 3000 www.algoma.com By IAN ROSS Northern Ontario Business Northern Ontario Business is a Canadian magazine, which publishes monthly in Greater Sudbury, Ontario. The magazine covers business news and issues in Northern Ontario. |
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