Algoma Steel backs out of Stelco bidding

Algoma Steel backs out of Stelco bidding

Canadian steel producer Algoma Steel recently announced that it would not submit an offer for insolvent fellow Canadian steel producer Stelco Inc. Algoma officials had been in talks with Stelco officials and shareholders since mid-December. While Algoma representatives acknowledged that there would be significant benefits in the merger of Algoma and Stelco, the company decided that the obligations associated with the proposed acquisition outweighed the potential benefits at present. Among other things, Stelco bidders would have to assume responsibility for a $1.3 billion pension plan shortfall. Meanwhile, Algoma announced net income for 2004 was C$343.8 million (US$277 million). The company had recorded net income of C$8.4 million in 2003.