January 21, 2007 / 6:52 AM / 12 years ago

Nucor to buy Harris Steel in $1 billion deal

TORONTO (Reuters) - Canada’s Harris Steel Group Inc. HSG.TO said on Tuesday it had agreed to a C$1.25 billion ($1.07 billion) takeover by U.S. steelmaker Nucor Corp.(NUE.N).

The deal builds on an existing partnership between the two companies and comes about a month after Harris said it had entered into talks that could lead to a sale of the company.

Nucor agreed to bid for all the shares of Harris Steel at C$46.25 a share, which represents a 37.5 percent premium over the 30-day volume-weighted average price on December 7 when Harris said it had held talks about a potential sale.

Shares of Harris were up C$2.51, or 5.8 percent, at C$46.00 by late morning on the Toronto Stock Exchange, while Nucor was down 62 cents, or 1 percent, at $54.66 in New York.

Harris Chief Executive John Harris and other members of the Harris family, along with Chief Operating Officer Paul Kelly, have agreed to tender their stock, representing about 51 percent of the outstanding shares.

Charlotte, North Carolina-based Nucor said the acquisition would immediately help its earnings and would not affect its supplemental dividend practice.

“The acquisition of Harris Steel Group significantly advances Nucor’s downstream growth initiatives,” Nucor’s chief executive, Dan DiMicco, said in a statement. “Harris Steel provides Nucor with immediate and broad geographical reach and with considerable scale and growth opportunities.”

The two companies already have a partnership as Nucor paid $21 million in 2004 to acquire a 50 percent stake in Harris’s U.S. reinforcing steel products operations.

“If you have a lot of cash and you’re having trouble finding places to put new steel mills, you have to go somewhere else,” said Charles Bradford, an analyst at Bradford Research/Soleil.

“One thing you can do is pay it out shareholders. But shareholders hold a company not for the cash typically but for its ability to invest. And this is just a way to invest.”

Harris’s products include reinforced steel bar, or rebar, for the construction industry, wire mesh for the mining industry and heavy industrial steel grating sold through its Harris Rebar, Laurel Steel and Fisher & Ludlow units.

A takeover bid circular will be mailed later in January to Harris shareholders. The deal has support of both boards and is expected to close within two months.

($1=$1.17 Canadian)

Additional reporting by Michael Erman in New York.

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