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Fluor Corp. May Sell Its 57.5% Stake in Doe Run Co.

Times Staff Writer

Prompted by interest from potential buyers, Fluor Corp. has hired two investment bankers to advise the Irvine-based firm on the possible sale of its 57.5% stake in the profitable Doe Run Co., the nation’s largest producer of primary lead.

One analyst said Fluor might be able to get as much as $250 million for its share of St. Louis-based Doe Run, which is owned jointly with Homestake Mining Co. in San Francisco.

The New York investment firms S.G. Warburg & Co. Inc. and Shearson Lehman Hutton will field “expressions of interest” for Doe Run, and Fluor will decide its plans for the company sometime this year, Fluor spokesman Rick Maslin said Tuesday.

Maslin said that Fluor began receiving inquiries from prospective buyers late last year, but that no written offers have been received.

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Doe Run was formed in 1986 when Fluor combined its lead operations with Homestake’s.

Last year, Doe Run accounted for $124 million of Fluor’s $5.1 billion in revenues. Fluor’s share of Doe Run produced an operating profit of $29 million last year, compared with a loss of $6 million for 1987. Performance continues to be strong this year, Fluor President Leslie G. McCraw Jr. said in a prepared statement.

Fluor has sold many of its commodities and mining businesses in recent years as part of a major restructuring begun in 1985 to diversify operations, which include international engineering and construction services. In 1987, Fluor sold its 90% share of St. Joe Gold operations and other gold properties for $500 million.

“They kept their lead business to turn it around. They’ve done that, and now’s a good time to sell,” said Tom Samuelson, an analyst at Duff & Phelps Inc., a research firm in Chicago.

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Doe Run, which produces about 60% of the nation’s primary, or newly mined lead, has become profitable partly because of the cost savings of combining operations of Fluor and Homestake, Fluor has said.

The prospects for lead demand are “flat,” especially for the car battery market, which is where most Doe Run lead is used, Samuelson said. Lead demand has steadily declined in recent years because of federal concerns about lead’s safety in consumer products.

Homestake, which is predominantly a commodities producer, is one possible candidate to purchase Fluor’s share of Doe Run, Samuelson said.


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