PITTSBURGH (AP) — U.S. Steel Corp. has agreed to pay roughly $1.1 billion (euro810 million) in cash for Canadian steelmaker Stelco Inc. in a deal to strengthen its position as a supplier of flat-rolled steel products in North America.
U.S. Steel said in announcing the deal late Sunday that Stelco's Lake Erie Works was the most modern integrated steel plant in North America, and said slabs produced at Stelco's Lake Erie and Hamilton, Ontario works will help U.S. Steel expand its flat-rolled and tubular businesses.
''With major facilities located on both sides of the Great Lakes, this acquisition will significantly increase our ability to respond to market demands and our customers' needs, said U.S. Steel chairman and chief executive officer John Surma.
Stelco emerged from bankruptcy protection last year and cut 15 percent of its work force, about 700 jobs, after settling a new four-year contract with the United Steelworkers union.
''Our goal through the restructuring process was to re-establish Stelco as a competitive steel company and position it to be part of a larger, stronger company that can provide additional security for our employees and their communities,'' said Stelco president and chief executive officer Rodney Mott.
Under the deal, U.S. Steel will pay 38.50 Canadian dollars for Stelco's about 30 million fully diluted shares.
In addition to the $1.1 billion (euro810 million) being paid for the shares, U.S. Steel will assume about $760 million (euro558 million) of Stelco's debt.
U.S. Steel also plans major capital improvements at Stelco's Hamilton and Lake Erie plants and is guaranteeing Stelco's pension funding obligations under a pension agreement Stelco and the province of Ontario reached last year.
U.S. Steel will also make a voluntary contribution of $31 million (euro22.8 million) to Stelco's main worker pension plan.
Officials expect the deal to close by year's end, subject to review by U.S. and Canadian regulators.