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Reprinted from:
Metal Bulletin.com

MetalSite acquisition deal struck

Management Science Associates of Pittsburgh has signed a letter of intent to purchase the assets of MetalSite Inc, which includes steel e-commerce pioneer MetalSite as well as offshoot ScrapSite.

Terms of the pending deal were not immediately disclosed and a spokesman for MSA said he was not certain exactly when MetalSite would be re-launched. He added, however, that MSA is "anxious to get it up as soon as possible." MetalSite and ScrapSite could be doing some business s early as next month. The sites initially could be similar to the ones that were idled June 8 but would likely be altered over time as MSA integrates its ideas and technology.

Unlike the original MetalSite, the re-launched version would have no US mill equity involvement and its neutrality would be a key feature, according to Alfred Kuehn, founder & chairman of MSA. He announced the deal with Richard Riederer, founder and chairman of MetalSite and the former ceo of Weirton Steel.

"The barrier to MetalSite's and ScrapSite's growth in usage by non-equity firms during their final year is overcome by this purchase," said Kuehn. "Industry concern about the ownership of MetalSite and ScrapSite, and profits accruing to competitors from use or sale of these exchanges, can now be put to rest."

Kuehn said MSA's success in developing and operating supply chain services for all members of other industries is based on its belief that a viable exchange cannot be owned by an active participate. The equity investors in MetalSite have included Bethlehem Steel, LTV Steel, Weirton Steel and Steel Dynamics.

The acquisition would take place through Metals Supply Alliances LLC, an MSA subsidiary that would purchase the MetalSite assets, including software and the MetalSite and ScrapSite names. Riederer has agreed to serve on the new firm's board of directors. Officers of the new company have not been announced. MetalSite's original president and ceo, Patrick Stewart, will not be joining the new owners' management team.

After the acquisition, MSA Process Automation Solutions & Services(MSA PASS), an MSA spin-off, would integrate its real-time scheduling and process control systems with MetalSite and ScrapSite software to reduce operating costs and provide greater value to steel and scrap industry participants.

"We believe MetalSite's assets are an excellent fit with MSA and MSA PASS," said Kuehn. "MSA played leading edge roles with technologies underlying e-commerce, (such as) electronic data interchange, Internet browsers, databases, data mining, on-line analytic processing, (and) security and privacy practices to assure business continuity."

MSA PASS has been developing real-time systems and solutions for the North American steel industry since 1982, according to MSA, a developer and host of Internet client applications that employs more than 800.

MetalSite handled over 2m short tons of product and conducted over 100,000 auctions since its 1999 start-up. The Pittsburgh-based company more than doubled its revenue and reached a new sales peak, primarily from its long-term users, in the month before it closed, according to Riederer. He added that after launching ScrapSite in May 2000, the company transacted an additional 200m pounds of sales among 50 firms, the most active scrap-metal market on the Web.