Steel Holding Corporation began a bidding war yesterday
for the National
Steel Corporation, offering $825 million for the company,
topping an earlier bid of $750 million from U.
The steel industry, run down by decades of decline,
struggling with rising pension and health care costs and
facing stiff competition from overseas competitors, is
littered with the husks of bankrupt companies like National.
More than 25 steel companies are in bankruptcy, and analysts
say a consolidation wave is sweeping the industry. Five years
from now, analysts predict, only about five major steel
companies will be left in the United States, with companies
like AK, based in Middletown, Ohio, and U. S. Steel, based in
Pittsburgh, expected to be among the survivors.
In addition to $825 million in cash, AK's bid includes the
assumption of $200 million in liabilities. U. S. Steel's bid,
announced on Jan. 9, consists of $650 million in cash, $100
million in stock and the assumption of $200 million in
In trading on the New York Stock Exchange yesterday, shares
of AK Steel fell 35 cents, or 4.6 percent, to $7.25. U. S.
Steel fell 37 cents, or 2.3 percent, to $15.97.
"This represents a superior bid for the assets of National
Steel and a strategic acquisition for AK Steel," Richard M.
Wardrop Jr., AK Steel's chairman and chief executive, said.
"The National operations would further diversify AK Steel's
rich product mix to include tin mill and construction market
products and present the opportunity for significant
U. S. Steel, the largest steel company in the country, said
it remained a bidder for National, which is based in
Mishawaka, Ind., and filed for Chapter 11 bankruptcy
protection in March 2002.
"We do have a signed agreement with National Steel that has
been approved by the boards of both companies," said John
Armstrong, a spokesman for U. S. Steel. "We continue to
believe that our bid for National is in the best interests of
all the stakeholders."
Mr. Armstrong said bankruptcy procedures allowed for other
bidders so creditors could obtain the best price for
National's assets. He said he was not surprised that a rival
bid had surfaced.
Nonetheless, some analysts said that AK Steel had been slow
to enter the fray.
"I find the bid very interesting because AK has talked
about wanting to buy assets and then has waited for others to
bid first," said Daniel Roling, a metals analyst with Merrill
Lynch in New York. "By making the bid now, they're only
driving the cost of the bidding up. If they really wanted to
buy this, why didn't they do it six months ago?"
AK Steel said its offer was subject to regulatory and
bankruptcy court approval, as well as the negotiation of a new
labor contract with the United Steelworkers of America, which
represents most of National's hourly employees.
AK's bid does not include the assumption of pension and
other benefits for retirees; the company has taken a rigid
stance in other recent labor negotiations. In December, it
ended a bitter three-year lockout of union workers at one of
its plants in Ohio.
AK's bid "presents an opportunity for AK Steel and the
U.S.W.A. to forge a constructive new labor agreement that
helps ensure that a consolidated U. S. steel industry remains
competitive," Mr. Wardrop said.
The union said it intended to examine AK's offer, along
with U. S. Steel's bid, while continuing to work with
National's management and creditors on a stand-alone
"Reaching a constructive agreement with AK Steel would be
extremely difficult," said Leo W. Gerard, president of the
union, "given the number of unresolved issues resulting from
AK's three-year lockout of 600 of our members in Mansfield,