German steelmaker ThyssenKrupp AG said Monday it offered to acquire Canadian steel company Dofasco Inc. for $4.1 billion in cash, trumping a hostile offer from Luxembourg’s Arcelor SA.
The offer, announced by the Duesseldorf, Germany-based company’s board, was for 61.50 Canadian dollars ($52.59) per share, 9.8 percent more than the bid made by Arcelor.
Dofasco’s board recommended shareholders accept the offer from ThyssenKrupp, a quick admission that it preferred the bid by the German suitor to that of its Luxembourg-based rival.
Dofasco, which is based in Hamilton, Ontario, mainly sells to U.S. automakers, producing around 5.5 million tons a year of flat steel mostly used for cars. However, U.S. automakers Ford Motors Co. and General Motors Corp. are scaling back production in response to high labor and raw material costs, overcapacity and competition from Asian and European manufactures.
Arcelor had made a $3.7 billion hostile takeover offer last week for Dofasco, its first foray into North America and a shift from its previous strategy of making acquisitions in developing markets.
At the time, Dofasco said it would review the offer, and urged its shareholders to await its recommendation before selling. Arcelor’s all-cash bid represented a 27.3 percent premium over the 44 Canadian dollars ($37) closing price of Dofasco’s shares on Nov. 22.
ThyssenKrupp’s bid is a 40 percent premium over Dofasco’s closing price on the Toronto Stock Exchange on the same day.
“The significant premium being offered reflects the strategic value of Dofasco to ThyssenKrupp in accelerating the growth of the combined companies in North America,” said Brian MacNeill, chairman of Dofasco’s board.
Arcelor had no immediate comment Monday.
ThyssenKrupp said the acquisition would help it expand its international presence and give it more access to North American markets, particularly the United States and Canada. It said no job cuts were anticipated.
“Strategic fit and the quality of the local employees are our priorities when considering an acquisition,” said ThyssenKrupp Chairman Ekkehard D. Schulz. “In the case of Dofasco, we win on both counts by advancing our North American strategy and adding the exceptional management team and highly regarded work force.”
Founded in 1912, Dofasco has facilities in Canada, the U.S. and Mexico. The company had revenue of $3.5 billion in 2004 and employs more than 7,000 workers.
ThyssenKrupp is one of the world’s biggest producers of steel, employing more than 187,000 workers, and reported revenue of $48.5 billion in 2004. The company is set to announce its 2005 results on Friday.