Nucor to Buy Harris Steel

Charlotte, N.C.-based steelmaker Nucor Corp. has agreed to purchase Canadian company Harris Steel Group for $1.07 billion (C$1.25 billion), or C$46.25 a share, representing a 6.3% premium to the shares' closing price on December 29. Harris shares gained 5.8% to reach a record-high C$46.04 on the news while Nucor shares shed 1%. Harris, which manufactures reinforced steel bar ("rebar") for the construction industry, wire mesh for the mining industry and heavy industrial steel grating, will provide Nucor with broader geographical reach and new opportunities for growth. The deal cements a relationship begun in 2004, when Nucor paid $21 million for a 50% stake in Harris's U.S. reinforcing steel operations. An ongoing surge in demand for metal prompted a record $78 billion in M&A activity in the steel sector during 2006, a trend that is expected to continue.

• Sources: Reuters, Washington Post, Bloomberg, Wall Street Journal
• Related commentary: Metal and Mining ETF: A Safer Way to Play Steel, Beware of Fashionable Investments, Metals and Mining: Blast Off!, Steel Suppliers Facing Rising Inventories, Lower Demand
• Potentially impacted stocks and ETFs: Nucor Corp. (NUE). Competitors: Commercial Metals Co. (CMC), United States Steel Corp. (X). ETFs: SPDR Metals and Mining ETF (XME), iShares Dow Jones US Basic Materials (IYM), Vanguard Materials (VAW)

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