U.S. Steel to buy Canada's Stelco

TORONTO -- U.S. Steel Corp agreed to acquire Stelco Inc for $1.1 billion, bagging the last big Canadian-owned steelmaker and strengthening its position in flat-rolled steel products in North America.

Chief Executive Officer John Surma said the deal, announced late Sunday, will make U.S. Steel the world's fifth-largest steelmaker.

He added that the deal, expected to close in the fourth quarter, would not preclude U.S. Steel from making further acquisitions. In June, the company completed the $2.1 billion acquisition of tubular steelmaker Lone Star Technologies.

"I don't think we're going to put up the stop sign -- this is a very dynamic industry," he told Wall Street analysts on a conference call Monday.

Stelco emerged from bankruptcy protection last year and put itself up for sale in June after a wave of foreign takeovers in the industry.

Pittsburgh-based U.S. Steel, which itself was a subject of takeover talk this year before giant German industrial conglomerate ThyssenKrupp denied an approach, said it would buy Stelco for $38.50 per share in Canadian dollars, a 43 percent premium over the company's closing stock price of $26.93 Friday.

U.S. Steel would also pay down the majority of Hamilton, Ontario-based Stelco's debt, which was about $760 million as of June 30, according to a joint statement late Sunday night.

The companies said shareholders owning more than 76 percent of Stelco's shares have agreed to support the deal.

During the conference call, Surma said that in addition to the shareholder support, the steelworkers' unions also backed the deal. "I can say the steelworkers approve of our transaction and support it. It's full steam ahead."