Canadian tubing manufacturer Lakeside Steel Inc. announced Tuesday that it is interested in acquiring some or all of the assets of Barzel Industries Inc. through the Chapter 11 bankruptcy process.
Lakeside Steel said in a press release that it believes that there is a very strong strategic fit between Lakeside fellow pipe and tubing producer, Barzel, which filed for Chapter 11 bankruptcy protection last week, that could be realized through the acquisition of certain of Barzel's assets or, potentially, Barzel's entire business.
On September 15, 2009, Barzel and its US subsidiaries voluntarily petitioned for protection under Chapter 11 of the US Bankruptcy Code and its Canadian subsidiaries filed an application in Canada seeking protection under the provisions of the Companies' Creditors Arrangement Act.
Headquartered in Norwood, Massachusetts, with operational hubs in Mississauga, Ontario, and Montreal, Quebec, Barzel operates a network of 16 pipe and tube, manufacturing, processing and distribution facilities that serve a variety of industries, from construction and industrial manufacturing to transportation, infrastructure development and mining.
Lakeside believes that the combination of its business with the assets of Barzel would enable substantially increased steel purchasing power, improved operating efficiencies and streamlined logistics.
Lakeside also said that in combination with the whole of Barzel, the joint company would have a diversified product mix with pipe and tube manufacturing, slitting, pickling, and would create what management believes is the sixth largest pipe and tube company in North America.
Ron Bedard, President and Chief Operating Officer of Lakeside Steel, said "Lakeside Steel will pursue those select mergers and acquisitions that allow us to grow our business profitably. Acquiring Barzel or certain assets from Barzel would clearly fit with this goal and would position Lakeside Steel to become an even stronger pipe and tube manufacturer as economic conditions improve."
Recently, Lakeside has been also been vying to acquire the much larger Canadian assets of US Steel, and was granted intervenor status in the Canadian government's civil case against US Steel in August. If the Canadian government finds that US Steel violated its employment and production promises made under the Investment Canada Act when it acquired Canadian producer Stelco in 2006, the court may impose fines, order it to live up to its commitments, or order the company to divest its assets, potentially to Lakeside Steel.