Despite Gains, Armco Says It’s Seeking Merger

Armco Inc., a diversified steelmaker digging out from three years of multimillion-dollar losses, says it is considering merging with another company or buying a competitor.

Robert E. Boni, Armco chairman and chief executive, says in the company’s new 1986 annual report that Armco has made tremendous gains in operations the past two years.

“But, as a stand-alone company, it will be difficult to afford the high cost of modernizing and consolidating that is needed to meet customers’ needs and remain competitive in terms of costs and technologies,” he said.

“We are considering a number of dynamic, strategic alternatives that range from merging all or part of Armco with another company to acquiring a major competitor,” he said. He said he wants to see Armco concentrate on producing steel and other metallic products.

Boni said the “patterns of change shaping future steel markets will require tomorrow’s steel producers, especially carbon flat-rolled producers, to achieve production efficiencies which are beyond the current capability of many companies. We must consider how profitable Armco’s existing steel businesses will be in the long run.”

Boni has presided over a slimming-down phase in which Armco sold some of its divisions to whittle its losses and concentrate on the steelmaking business.

In 1985, Boni said Armco would first pay down its debt and restore profitability, then would reconfigure its operations.

He said in the 1986 annual report that in two years, Armco has generated $530 million in cash from sale of assets and $414 million from reductions and improved operating performance.

Armco has eliminated more than $1 billion in debts and other obligations since 1985, he said.