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Jan. 2, 2007, 10:28AM
Nucor Offers $1.07B for Harris Steel


By IEVA M. AUGSTUMS AP Business Writer
© 2007 The Associated Press

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CHARLOTTE, N.C. — Steel products maker Nucor Corp. said Tuesday it offered $1.07 billion for Canada's Harris Steel Group Inc., whose board is recommending its shareholders accept the all-cash bid.

Nucor, which makes steel from recycled metal at its "minimill" operations across the United States, said the deal would broaden its geographic reach and give it opportunities to grow.

Nucor is offering 46.25 Canadian dollars ($39.69) for each Harris Steel share, a 6 percent premium over Harris' closing price of 43.49 Canadian dollars ($37.32) Friday on the Toronto Stock Exchange.

Shares of Harris jumped on the Toronto Stock Exchange in midday trading by $2.53 Canadian dollars ($2.17), or 5.82 percent, to 46.02 Canadian dollars ($39.64). In the last 52 weeks, the company's share price has ranged from 23.50 Canadian dollars ($20.17) to 50 Canadian dollars ($42.90).

The offer values Harris's stock at 1.25 billion Canadian dollars ($1.07 billion), according to Nucor. Harris also had 123 million Canadian dollars ($105.5 million) in debt at the end of September.

The tender offer will be open for at least 35 days and has the support of the boards of both companies, the news release said.

In addition, the companies said John Harris, chairman and chief executive of Harris Steel, and other members of the Harris family as well as Paul Kelly, Harris Steel's president and chief operating officer, have agreed to tender their shares to Nucor, giving Nucor more than 50 percent of Harris Steel shares.

In 2004 Nucor paid $21 million to acquire a 50-percent stake in Harris' 11 U.S. reinforcing steel products operations. Harris has 23 additional plants in Canada.

"We've come to know them very well and they've come to know us very well," said Nucor Executive Vice President Hamilton Lott. "They've shown the ability to not only be profitable, but the ability to grow."

The deal requires regulatory approval in the United States and Canada. Nucor plans to allow Harris Steel to operate as a separate, wholly owned subsidiary once the deal is completed.

Nucor expects the acquisition to immediately bolster earnings.

The move is the latest for the Charlotte-based company that has grown significantly since Daniel R. DiMicco became chief executive in 2000. Since then, the company has bought 16 plants and is looking at expansion and construction opportunities, most recently announcing plans to expand operations in Memphis, Tenn.

"We purchase when we think it makes sense to purchase. We expand and build at other times," Lott said. "We continue to leave both options open."

Nucor, the nation's largest recycler, has operations in 18 states.

It manufactures steel from recycled scrap at its "minimills," rather than from scratch like U.S. Steel-style "integrators." While the old-line companies suffered in the 1980s and 1990s, Nucor became a powerhouse: Scrap could be had more cheaply than the raw materials needed to run integrated mills, and Nucor has kept unions out of its mills, which keeps labor costs down.

Nucor shares closed Friday at $54.66 on the New York Stock Exchange. The NYSE was closed Tuesday for the funeral of former President Gerald R. Ford.

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