Canadian steelmaker Algoma Steel to go public with $1B takeover deal with American firm
SAULT STE. MARIE -- Algoma Steel in Sault Ste. Marie is merging with an American acquisition firm that specializes in taking over industrial companies and taking them public.
The $1.7-billion deal with New York-based Legato Merger Corp. will give Algoma access to millions of dollars in capital and will be publicly traded on the stock market.
Algoma Steel CEO Mike McQuade said the merger will allow the company to make a substantial investment in a process called Electric Arc Steel Making, which is proven to be more efficient and better for the environment than a traditional blast furnace.
The result is Algoma’s carbon footprint being reduced by three million tonnes.
“It’s equivalent to a coal-fired power plant and will have significant impact in terms of achieving a step toward the federal targets for reduction in greenhouse gas and addressing climate change,” said McQuade, who said that should the merger be approved, a large number of construction jobs will be up for grabs during the plant’s upgrade.
He said that will be followed by stable permanent staff levels.
“Ensuring that the jobs at Algoma Steel are more secure, we’ll be a more competitive supplier and increase the likelihood that we protect those very valuable jobs that will continue to contribute to pensions and benefits for hopefully generations to come,” McQuade said.
Sault Ste. Marie Mayor Christian Provenzano expressed cautious optimism about the merger, since it is still in the early stages and subject to a number approvals.
“I think it’s a positive if the company begins trading again on the stock markets, and I’m hopeful -- and I think all of us want the same thing -- which is to have a healthy steel producer in Sault Ste. Marie that has a very viable long-term future,” said Provenzano.
Mike Da Prat, president of the United Steelworkers Local 2251, said it’s too early to tell what benefits a deal may bring to his members.
“I was informed that it would improve our debt rating and provide a number of other benefits,” said Da Prat. “The best I can say is I’m cautiously optimistic.”
Meanwhile, the president of the Sault Ste. Marie Chamber of Commerce sees the merger as positive news for the city.
“That really is going to be a benefit to our community because of the small- and medium-sized enterprises that are part of Algoma Steel’s supply chain,” said Rory Ring.
“So that means more opportunity for them to do work with Algoma Steel, which means it creates potential job opportunities.”
The merged company will see Algoma retaining control in the boardroom. Algoma will appoint six directors to the board, Legato will appoint three and one will be jointly appointed. The merger process is expected to take up to three months.