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American Metal Market

MSA in deal to buy MetalSite, plans restart
By Tom Balcerek

PITTSBURGH, Aug. 22 -- Management Science Associates Inc. (MSA), here, 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. The terms of the pending deal were not immediately disclosed and a spokesman for MSA said he was not certain when MetalSite would be re-launched. He added, however, that MSA was "anxious to get it up as soon as possible." Initially, the Web site could be similar to the one that was idled June 8 but would likely be altered over time.

Unlike the original MetalSite, the re-launched site would have no U.S. mill equity involvement and its neutrality would be a key feature, according to Alfred Kuehn, founder and chairman of MSA. He announced the deal with Richard Riederer, founder and chairman of MetalSite and the former chief executive officer of Weirton Steel Corp.

"The barrier to MetalSite's and ScrapSite's growth in usage by non-equity firms during their final year is overcome by this purchase," Kuehn said. "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 that MSA's success in developing and operating supply-chain services for members of other industries was based on MSA's belief that a viable electronic exchange could not be owned by an active participant in the same market. The equity investors in MetalSite included Bethlehem Steel Co,, LTV Steel Co. and Steel Dynamics Inc., as well as Weirton Steel.

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 company's board of directors.

After the acquisition, MSA Process Automation Solutions & Services Inc. (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," Kuehn said. "MSA played leading-edge roles with technologies underlying e-commerce, (such as) electronic data interchange, Internet browsers, databases, data mining, online analytic processing (and) security and privacy practices, to ensure 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 800.

MetalSite handled more than 2 million short tons of product and conducted more than 100,000 auctions since its 1999 start-up. MetalSite had 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 200 million pounds of sales among 50 companies, the most active scrap-metal market on the Web.