News Room - Steel Industry

Posted on 04 Mar 2010

Steelmaker Nucor forming JV with Japan's Mitsui

U.S. steelmaker Nucor Corp and Japan's Mitsui & Co Ltd said on Wednesday they are forming a joint venture to operate a steel processing network in North America and elsewhere.

 

Each company will own a 50 percent interest in a newly created company, NuMit LLC, whose first investment will be to acquire all the assets, operations and business held by Mitsui in Steel Technologies, Inc.

 

The transaction will close after resolution of regulatory approvals and other conditions, said Nucor and Mitsui & Co. (U.S.A.) Inc., a subsidiary of Mitsui & Co., Ltd.

 

Steel Technologies, based in Louisville, Kentucky, has been owned by Mitsui since 2007 and operates 23 sheet processing facilities throughout the United States, Canada and Mexico.

 

The companies gave no financial details, but analyst Michelle Applebaum of Steel Market Intelligence, said Mitsui paid $550 million for the privately held company in 2007.

 

"For all practical purposes, Nucor is buying a half interest in...Steel Technologies," she wrote in a note. "Nucor's investment in the JV was undisclosed but we suspect it was far less than half of Mitsui's purchase price."

 

Applebaum said Steel Technologies had roughly $1 billion in annual sales and for Nucor, the JV was "probably the single best piece of strategic news we've had on the company in the past two years."

 

The deal had the potential for other opportunities and "should help the company expand globally," Applebaum wrote.

 

In early trading on the New York Stock Exchange, Nucor's stock rose 1.3 percent to $43.47.