In a deal that may mark the end of an independent Canadian steel industry, Stelco Inc., once known as Steel Company of Canada, has agreed to be taken over by United States Steel Corporation.

The Hamilton-based company, which led the industry for generations, has struggled in recent years. It clawed its way out of bankruptcy protection only last year.

Stelco three-month chart

But with steel prices rising and steel companies around the world consolidating, it became a saleable item, the CBC's Danielle Bochove reported.

In June, the company revealed it was putting itself on the block. Now U.S. Steel has agreed to buy it for $38.50 a share, or a total of about $1.1 billion US. 

On the Toronto Stock Exchange, Stelco's share price opened Monday at $37.75 — up $10.82 or 40.2 per cent — after the overnight announcement.

The stock closed the day at $37.63, up $10.70.

If it goes through as planned, the deal will add Stelco's name to those of Dofasco, Algoma, Ipsco, Co-Steel, Harris and other Canadian steel companies that have gone to foreign control.

Canadian steel company takeovers
Company	Buyer	Price
Algoma Steel	Essar Global (India)	$1.86B
IPSCO	SSAB (Sweden)	$8.5B
Dofasco	Arcelor/Mittal  (Lux.)	$4.9B
Harris Steel	Nucor (USA)	$1.25B
Co-Steel	Gerdau (Brazil)	$600M
Stelco	U.S. Steel (USA)	$1.1B

In terms of what it means for Stelco's 3600 employees, U.S. Steel chief executive John Surma has been quoted as saying there are no plans to reduce the workforce and there is apparently some pension protection. 

Two years ago, Stelco agreed to make $675 million in pension payments over 10 years in exchange for a loan from the Ontario government. U.S. Steel says it will guarantee those obligations and contribute an additional $32 million to the plan.

In a statement, Surma said Stelco has "an exceptional group of employees.

"We look forward to building on the unique talents, commitment and expertise they will bring to the U. S. Steel family," he said.

Shareholders holding more than three-quarters of the stock have already signed off on the deal, which still needs regulatory approval.

The owners of more than 76 per cent of Stelco's shares, including Tricap
Management, Sunrise Partners, Appaloosa Management and Stelco CEO Rodney Mott, have signed agreements irrevocably committing them to support the deal, U.S. Steel said.

It said it has financing lined up, suggesting the deal would not be vulnerable to disarray in some credit markets.

It plans to pay for the purchase and pay off the majority of Stelco's debts with a combination of cash on hand, existing credit facilities and two new, fully committed facilities totalling $900 million underwritten by J. P. Morgan Securities and Scotia Capital, it said.

U.S. Steel said it expects the deal to strengthen its position as a supplier of flat-rolled steel in North America.

It hailed Stelco's Lake Erie Works at Nanticoke, Ont., as "the most modern integrated steel plant in North America," and said slabs produced there and at Stelco's Hamilton works will increase its semi-finished steel supply capabilities.

The combined company will have annual raw steel capacity of about 30 million net tonnes, U.S. Steel said.