Nucor buys Harris for $1.1 billion

By Tom Stundza -- Purchasing, 1/3/2007 7:35:00 AM

Canadian steelmaker Harris Steel Group , on the market since December, has agreed to be purchased by U.S. steelmaker Nucor for $1.1 billion. Harris Steel Group makes carbon steel reinforcing bar for the construction industry and wire mesh for the mining industry. The Toronto-based firm had sales in excess of $1 billion in 2006. Through 44 strategically located facilities in Canada and the U.S., the firm sells value-added products and services to a diverse customer base within the construction, automotive, industrial and mining markets.

Charlotte-based Nucor now mostly makes numerous first-stage steel mill products, including wire rod and rebar. With this deal, the U.S. steelmaker sees an opportunity in finishing steel products for its customers and in distribution rather than in just adding steelmaking capacity. Interestingly, Nucor and Harris already have had a 50-50 partnership since 2004 in Harris's U.S. reinforcing steel operations.

Mike Willemse, analyst at CIBC Capital Markets says the Nucor-Harris arrangement—and the recent buyout of the Encore Group of Canada by service center giant Reliance Steel & Aluminum of the U.S.—“suggest that acquisitions of downstream steel processors will likely continue in 2007.” He says “the acquisition of the Encore Group of service centers further increases Reliance Steel's product range and geographic diversification, particularly into Western Canada.”