But Canada’s top steelmaker currently not for sale
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Published Jan 23, 2024 • Last updated 1 hour ago • 2 minute read
Stelco Holdings Inc. is seeking fresh opportunities to expand through acquisitions while boosting shareholder returns to make Canada’s largest steelmaker more appealing to investors and — eventually — to potential buyers.
Chief executive Alan Kestenbaum said the company learned from Nippon Steel Corp.’s deal to buy United States Steel Corp. that having good steelmaking assets is attractive to overseas buyers. He intends to make targeted acquisitions to grow the company he helped take over in 2017.
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While Kestenbaum stressed that Stelco isn’t currently for sale, the chief executive is keen to beef up the company’s assets to potentially attract a buyer in the future.
“Very strong metal-making assets are attractive to overseas buyers,” Kestenbaum said in an interview in New York. “We’ve learned that the market absolutely appreciates iconic assets — upstream and also downstream capability — and that’s how we’re going to position ourselves.”
His comments mark a shift in Stelco’s industry approach, which had mostly focused on turning around the business of a steelmaker that had survived a mid-2000s slump, bankruptcy protection and changing ownership in its 114-year history. While the Hamilton, Ont.-based company is most likely to focus on acquisitions, Kestenbaum said it’s still open to internal growth to improve the business.
Kestenbaum said the market values metal processing in electric-arc furnaces, which now account for about 70 per cent of U.S. steelmaking, as well as in traditional integrated mills. Those mills, which Stelco operates, have faced criticism in recent years for being older assets that are more polluting.
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The chief executive said he’s interested in boosting Stelco’s hot-rolled steelmaking and adding production of cold-rolled, coating processes or galvanized steel that feed into end products. The company wants to also lift output of advanced high-strength steels, which feed the high-margin automotive industry. Kestenbaum said he’ll stick to the North American market.
Kestenbaum also said he’ll increase capital returns for investors, repaying more than the 10 per cent the company yielded last year. Stelco has issued a special cash dividend in each of the last two years.
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“We’re increasing value for all shareholders so that they can achieve significant additional value and returns and make ourselves more attractive as both an investment and a future target,” he said.
Bloomberg.com
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