The world’s second-biggest steelmaker is offering CDN$4.3 billion (US$3.8 billion) for automotive industry-focused Dofasco, aiming its pitch at shareholders of Canada’s largest steelmaker after being rebuffed by management, according to The Associated Press (AP).
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The report said Luxembourg-based Arcelor is on the front lines of a consolidation that’s reshaping the steel industry and has previously focused on making acquisitions in developing economies. With Wednesday’s hostile bid, the steelmaker is looking to use Dofasco as a springboard into North American steelmaking.
AP noted that Dofasco, Canada’s largest steelmaker by revenue, gears itself to automotive customers and its work force of 7,400 people is mostly non-union.
Arcelor is offering CDN$56 (US$47.79) a share in cash for the Hamilton, Ontario-based company, 27.3% more than Tuesday’s closing stock price of $44 ($37.55), the report said.
Dofasco’s board reportedly issued a cautious response to the bid.
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By GlobalData“The board will give due consideration to the Arcelor bid,” Dofasco chairman Brian MacNeill said in a statement cited by The Associated Press. “Pending the board’s recommendation, shareholders are urged not to tender to the offer.”
AP noted that, so far, Canada’s three big steelmakers have bucked the consolidation trend that led to 117 steel mergers worth US$31.4 billion last year. Both Algoma Steel and Stelco have looked for buyers recently without success.
In an interview Wednesday, Arcelor CEO Guy Dolle reportedly said Canadian steel producers are not immune to the forces driving consolidation.
North American automakers are in the midst of well-publicised turmoil, but Dolle said, according to AP, that the problems at General Motors are not plaguing the US and Canadian plants of Japanese car makers, and he intends to increase Arcelor’s exposure to those customers.
North Carolina-based Nucor, Mittal Steel Company and Japan’s Nippon Steel are among the rivals that may try to top Arcelor’s offer, analysts told The Associated Press.
