Nucor proposes to buy assets of strapped Birmingham Steel

$500 million offered in consolidation bid

February 15, 2002|By BLOOMBERG NEWS

CHARLOTTE, N.C. -- Nucor Corp., the most profitable U.S. steel maker, offered yesterday to acquire most of the assets of money-losing rival Birmingham Steel Corp. for $500 million in the latest attempt to consolidate the industry.

"We had been in discussions with Birmingham for a couple of years," Nucor Vice President Joseph Rutkowski said in a conference call with investors. "We didn't get anywhere. We felt it was compliant to let shareholders know we are willing to execute a deal that is in their best interest."

Nucor Chief Executive Officer Daniel DiMicco made the offer in a letter to John Correnti, his counterpart at Birmingham Steel and a former chief executive of Charlotte-based Nucor. U.S. steel companies such as U.S. Steel Corp. and Bethlehem Steel Corp. are seeking to combine to reduce expenses to become more competitive with foreign rivals selling lower-priced steel.

"It's one more positive to make the [steel] industry healthy," said Daniel Roling, an analyst at Merrill Lynch & Co. "Nucor is going to continue to be very aggressive in acquiring assets and companies. U.S. Steel will gobble up [those companies] if they don't -- at [Nucor's] expense."

Birmingham Steel posted a loss of $197 million on sales of $700 million in the fiscal year that ended in June and has recorded losses for eight straight quarters. The company has been trying to refinance about $291 million in debt that's due in April, and Ernst & Young LLP, the company's auditor, has questioned Birmingham Steel's ability to continue.

U.S. Steel in December offered to buy as many as six smaller rivals to force an industrywide consolidation that would allow the domestic steel industry to become more competitive with foreign rivals selling lower-priced steel. Eighteen U.S. steel makers have filed for bankruptcy protection since 1997, most blaming inexpensive imported steel.

Nucor's offer excludes a steel-bar plant in Cleveland that Birmingham Steel plans to sell.

Birmingham makes steel bars used to build highways, bridges and buildings and would expand Nucor's sales of steel bar.

Shares of Birmingham Steel rose 28 cents to close at 59 cents. Nucor dropped 95 cents to $57.70. Officials of Birmingham, Ala.-based Birmingham Steel didn't return calls seeking comment.

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