Canada's Algoma Steel Inc. is in talks to go public through a merger with Legato Merger Corp. (NasdaqCM:LEGO) a blank check-firm, according to people with knowledge of the matter. A deal is set to value the combined entity at more than $1 billion, one of the people said, asking not to be identified discussing private negotiations.

Terms could change and, as with all transactions that aren't yet finalized, it's possible talks could collapse. Representatives for Algoma Steel and Legato didn't immediately respond to requests for comment.