Middletown     Web


  Tell me how to:
  Buy a subscription
  Buy a print ad
  Buy an online ad
  Reach newsroom
  Reach web staff
  Write to the editor
  Set my homepage


Steel buyout talks heat up

By Thomas Gnau, Journal Business Writer, E-mail:

The steel industry consolidation dance may be heating up again.

“A potential acquirer” has approached steelmaker Rouge Industries, according to a Pittsburgh Post-Gazette story Tuesday. The story said “many analysts believe” the suitor is U.S. Steel Corp.

Also Tuesday, Chris Olin, an analyst with Cleveland’s Longbow Research, told The Journal that he has heard that AK Steel Corp. representatives have spoken with Ispat Inland Inc. officials.

AK Vice President of Public Affairs Alan McCoy declined to comment. A spokeswoman for Ispat Inland could not be reached.

Part of Ispat International, East Chicago, Ind.-based Ispat Inland calls itself the sixth-largest integrated steelmaker in the United States.

After U.S. Steel beat AK in April in an acquisition battle for bankrupt National Steel, AK Chairman and Chief Executive Richard Wardrop pledged to look for further acquisition opportunities.

Industry observer and union consultant Michael Locker, publisher of the Steel Industry Update, said that excluding mini-mills, only four “legacy-burdened” integrated steelmakers remain: WCI Steel, Ispat Inland, Rouge — and AK.

Olin added Weirton Steel to that list.

Locker likened mergers to a game of “musical chairs.” Acquirers negotiate contracts freeing them of some legacy costs — pensions and retiree health care benefits — while the companies that are left behind still grapple with those costs.

“The chairs are quickly disappearing,” Locker said.

“In my opinion, AK is no longer a leader in the steel industry,” Olin said.

McCoy declined to respond to Olin’s remark. He also declined to say whether AK is talking with Rouge.

U.S. Steel spokesman John Armstrong would not say whether his company is interested in Rouge.

But he said the domestic steel industry was given three years of breathing room through tariffs on imported steel to consolidate. Those tariffs will have been in effect for half of their duration in September, he said.

“Time is of the essence in getting the consolidations done,” Armstrong said.

While U.S. Steel has acquired National, International Steel Group has acquired LTV Steel and Bethlehem Steel.

With AK’s share price trading just above $3 — the stock closed at $3.04 Tuesday, down 5 cents — Olin said it was more likely that AK would be acquired than acquire. Olin mentioned German industrial conglomerate ThyssenKrupp AG as one possibly interested company, but he had no definitive information to share.

A spokesman for Dusseldorf, Germany-based ThyssenKrupp could not be reached.

But McCoy said that AK’s competitors active in consolidation are shedding legacy costs only temporarily. They have only “restarted the clock” on those costs, he said.

He acknowledged that those moves give competitors at least an temporary advantage over AK “to some degree.”

That’s one reason why AK has invited the union representing its more than 3,000 Middletown workers, Armco Employees Independent Federation, to talk about ways AK can remain competitive.

The AEIF has agreed to talk but without reopening its current collective bargaining agreement for the moment. The contract expires in February 2006.

The AEIF isn’t the only union to which AK has made overtures. AK has workers represented by United Steelworkers of America in Ashland, Ky., and Mansfield, Ohio, United Auto Workers in Rockport, Ind., and another independent union in Butler, Pa.

“We’re going to have those discussions with all of our plants and constituents,” McCoy said. He declined to say whether any talks have started.

U.S. Steel and Rouge have strong ties. U.S. Steel supplied Rouge with about 92 percent of the coke Rouge bought last year, Armstrong said. Both own an electrogalvanizing line in a joint venture called Double Eagle Steel Coating.

Published 06.11.03



 Email this page to a friend

By using this service you accept the terms of our Visitor Agreement.
Registered site users, to edit your personal profile, click here.

© 2003 Cox Newspapers, Inc.
The Middletown Journal
Privacy Policy | About this site | Write to us