Of course this deal fell apart and this never did happen.
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Northwestern Steel And Wire Agrees To Takeover
Tentative Deal Seen As Way To Save Jobs
February 14, 1998 | Chicago Tribune Staff Writer.
Northwestern Steel and Wire Co., which only recently has begun rebounding from a long slump, said Friday it has tentatively agreed to be taken over by a Southern steelmaker in a cash-and-stock deal valued at roughly $240 million.
The takeover would mean the disappearance of an Illinois corporation that dates to 1879, but the companies said it may help secure the jobs of Northwestern’s 2,100 employees in Sterling, about 100 miles west of Chicago.
If Northwestern reaches a definitive deal with Bayou Steel Corp. of La Place, La., the companies said they would spend more than $100 million to replace a mill that makes structural steel with a new mill with almost twice the steelmaking capacity.
The companies also said they would leave in place Bayou’s mills near New Orleans and Knoxville, Tenn., as well as its Chicago warehouse.
“No one is going to come in with a meat ax,” said Timothy Bondy, Northwestern’s chief financial officer.
But while employees may embrace a merger, Northwestern’s shareholders may be hoping for better terms. Unlike most takeover proposals, Bayou Steel’s bid for Northwestern did not include any premium for the company’s shares.
At most, Northwestern investors would receive $2.29 in cash and $1.71 worth of Bayou stock for each Northwestern share, or $4 altogether. That is below Northwestern’s closing price of $4.44 a share on Thursday.
Northwestern shares dropped 81 cents on Friday, to $3.62, on the Nasdaq stock market. Bayou shares rose 69 cents, to $6.44, on the American Stock Exchange.
At $4 a share, Bayou would be paying $100 million for Northwestern’s shares. It also would assume Northwestern’s debt, estimated at $140 million.
Northwestern–a mini-mill that makes steel by melting scrap steel in electric arc furnaces–has had a rough time over the last decade. A management-led group bought the company in 1987, but foundered after acquiring a money-losing mill in Houston.
Northwestern was on the verge of bankruptcy in 1993 when Kohlberg & Co. bought a controlling interest for $35 million. The company re-emerged as a publicly traded firm a year later, with Kohlberg retaining a 35 percent interest.
Even in the strong steel market of the 1990s Northwestern has been only marginally profitable. Since 1990, Northwestern has lost a total of $85 million, including a $63.1 million loss in fiscal 1997, which ended July 31.
But last spring, Northwestern brought in a new chairman and chief executive–Thomas A. Gildehaus, who had just restructured UNR Industries Inc.
Then, last summer, Northwestern closed its Houston mill, firing 325 employees, and last fall the company recorded its best first-quarter results since 1993, a profit of $7.8 million on sales of $138.9 million.
Northwestern’s survival is also important to Unicom Corp.’s Commonwealth Edison Co.
With its three 400-ton electric furnaces, which are among the largest in the world, Northwestern is Edison’s single biggest power customer.
