|
Steel maker stocks higher
|
 |
June 3, 1999: 9:11 a.m. ET
British Steel, Holland's Hoogovens rise on disclosure of merger talks
|
LONDON (CNNfn) - Shares of British Steel and Dutch steel maker Hoogovens rose Thursday after the companies revealed merger talks to create Europe's largest steel maker and the global number three.
The deal would create a giant with sales of more than $16 billion and a market capitalization of $4.1 billion. It also marks the latest consolidation in the European steel sector, which has been hamstrung by sluggish regional demand and complaints over dumping by Asian producers.
Hoogovens shares jumped nearly 19 percent when they resumed trading in Amsterdam on Thursday, after suspension on Wednesday afternoon. They later eased to trade 14.5 percent higher at 43.40 euros.
British Steel, which had remained aloof from European consolidation, surged 21 percent Thursday and its shares continued their climb before investors booked gains and pegged the shares back to their open at 161 pence.
The two companies admitted to merger talks after a week of speculation and promised a further statement by June 7. British Steel said that any merger would be accompanied by a return of value to shareholders.
British Steel, the global number seven, may return up to 400 million pounds ($641.6 million) could be returned to shareholders through share buybacks or a special dividend.
The U.K. company has been drastically downsized since privatization. Even though its plants remain among the most efficient in the world, it has been hammered by the strength of sterling. It also fell out of the FTSE 100 index of leading British stocks last year as its shares sagged.
Analysts said the deal would reduce British Steel's exposure to sterling's swings. It has stood on the sidelines while most of Europe's other leading steel companies have forged their own mergers.
Germany's Thyssen and Krupp joined forces last year to form Thyssen Krupp and France's Usinor last month boosted its position by buying Cockerill Sambre of Belgium.
Hoogovens is one of the few free targets in Europe and analysts expect British Steel will have to pay a sizable premium to secure control, necessary if it is to recoup through cost savings. 
-- from staff and wire reports
|
|
|
|
|
|
British Steel
Hoogovens
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
.
