AK Steel makes rival bid for National

$1.02 billion offer exceeds U.S. Steel's by $175 million

January 24, 2003|By BLOOMBERG NEWS

MIDDLETOWN, Ohio - AK Steel Holding Corp. made a $1.02 billion bid yesterday for National Steel Corp., $175 million more than U.S. Steel Corp. offered for the bankrupt company two weeks ago.

AK Steel's offer includes $825 million in cash. Each proposal includes the assumption of $200 million in liabilities and would have to be approved by creditors and a bankruptcy court.

"The creditors make an effort to get a bidding war started where emotions take over," said Martin Zohn, a bankruptcy attorney with Proskauer Rose LLP who has been involved with steel bankruptcies. "That process gets pretty rough and tumble."

AK Steel, the biggest U.S. maker of automotive steel, would also become a larger supplier for buildings. Its bid is the latest toward industry consolidation spurred by Wilbur Ross' formation of International Steel Group Inc. last year. Ross bid $1.5 billion for Bethlehem Steel Corp. this month, threatening U.S. Steel's 102-year-old status as North America's biggest maker of raw steel.

"The dominoes have started to fall on consolidation," Zohn said.

AK Steel will ask a bankruptcy judge Thursday to declare it the lead bidder for National Steel.

Mike Dixon, a spokesman for U.S. Steel, said his company's offer has been signed by National Steel management and also will be submitted to the court Thursday.

"Because we are under Chapter 11 protection, we are subject to the highest and best bid," National Steel spokeswoman Anita-Marie Hill said. "Our bidding procedure hearing was completed last week setting the protocol for offers. If the bids were going to come, they would begin at this point in time."

National Steel's plants can make as much 7 million tons of steel a year. The Mishawaka, Ind.-based company has about 8,200 employees.

Both offers for those assets are dependant on negotiating a new contract with the United Steelworkers of America and don't include the assumption of pension and retiree health-care costs, the companies said.

The shares of AK Steel fell 35 cents yesterday to close at $7.25 on the New York Stock Exchange.

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