The consolidation in steel continues. British
Steel has agreed to acquire Royal Hoogovens NV, the Dutch
steel maker. The merger will create Europe''s second largest
steel maker. The past year has seen two other mergers
in the European steel industry -- the acquisition of Cockerill
Sambre SA of Belgium by Usinor SA of France for $1.1 billion,
and the merger of Thyseen AG and Fried Krupp Hoesch.
Usinor, with its output of 25.6 million tonnes in 1998, is
currently the largest steel maker in Europe. British Steel and Hoogovens together made an
aggregate 22.5 million tonnes.
British Steel will have 61.7 per cent of the new company,
to be called BSKH, and Hoogovens 38 per cent. Additionally, the British company''s
shareholders will be paid an equivalent of $1.12 billion, or 35 pence a share in cash.
The merger will come as a reprieve for the
two companies, hurt, like other steel
makers, by the one-third decline in steel prices in the past year. The merger will help
them shave off an estimated 194 million pounds sterling in costs annually. British Steel
incurred a net loss of 81 million pounds sterling in the year ended 31 March 1999. In the
previous year it had earned a profit of 226 million pounds.