US Steel have signed an agreement with National Steel Corporation to acquire their steel making and finishing assets for $950 million. The purchase price includes nearly $200 million in liabilities and net working capital of $450 million.
The transaction is dependent on the ability to negotiate a new labour agreement and subsequent approvals by governing bodies. The parties expect to be able to close the deal during the second quarter of 2003.
The acquisition will give US Steel an annual capacity of 25 million tons, making them the fifth largest steel producer in the world.
Plants to be acquired according to the agreement include:
- Great Lakes Steel at Ecorse and River Rouge, Michigan, USA
- Granite City Div. in Granite City, Illinois, USA
- Midwest finishing facility in Portage, Indiana, USA
- Procoil Corp in Canton, Michigan, USA
- As well as various other subsidiaries and joint venture interests
They have also identified several areas where the merged organisation will be able to cut costs such as increased scheduling and operating efficiencies, elimination of redundant overhead costs, reduction in freight costs and the negotiation of an improved labour contract. These savings are estimated at $170 million within two years of closing the deal.
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