Evraz to Acquire Claymont Steel for $564.8 Million
12/11/2007 - Building on its recent acquisition of Oregon Steel, Evraz Group SA announces plans to expand its North American presence with the acquisition of Delaware-based Claymont Steel for an aggregate price of approximately US$564.8 million, including debt and net of cash.
Building on its acquisition of Oregon Steel earlier in 2007, Evraz Group SA has announced plans to expand its North American presence with the acquisition of Delaware-based Claymont Steel for an aggregate price of approximately US$564.8 million, including debt and net of cash.
Under the definitive agreement between Evraz Group SA, its wholly owned subsidiary Titan Acquisition Sub, Inc., and Claymont Steel Holdings, Inc., Evraz would acquire Claymont Steel for US$23.50 per share. According to the company, the US$23.50 per share offer price represents a 19.1% premium to Claymont Steel's three-month volume-weighted average stock price, a 38.2% premium to Claymont Steel's initial public offering price of US$17.00 in December 2006, and a 6.8% premium to the US$22.00 closing price of Claymont Steel's stock on Friday, December 7, 2007.
Under terms of the agreement, Evraz Group’s Titan subsidiary will make the cash tender offer for all shares of Claymont Steel common stock and then merge with Claymont Steel. The Claymont Steel board of directors has unanimously recommended that the Claymont Steel shareholders accept the offer. H.I.G. Capital LLC, Inc., which owns approximately 42.6% of Claymont Steel's issued common stock, has already committed to tender its shares in the offer.
Upon completion of the transaction, Claymont Steel will become a subsidiary of Evraz.
“We believe that this transaction delivers significant value to our stockholders,” said Jeff Bradley, Claymont Steel's Chairman and CEO. “We are excited at the opportunity to become part of a company with a significant international presence. As a plate producer, we believe Claymont Steel will be able to contribute to and complement Evraz's North American operations at Evraz Oregon Steel Mills, Inc. We believe that our customers will also support this deal."
"This transaction represents yet another important step in the implementation of our long-term strategy to develop higher-value downstream markets," said Alexander Frolov, Evraz's Chairman and CEO. "It will expand our presence in North America, one of the most important steel markets globally. Having acquired Oregon
Steel Mills at the beginning of this year, we laid the foundation of our American plate business and intend to continue to strengthen it now with Claymont Steel's steel plate production. We will also be happy to have Claymont Steel's experienced personnel joining Evraz's multinational team."
The offer, which is expected to commence during the week of December 17, 2007, will be subject to customary conditions, including antitrust clearance, and Evraz’s acquisition of a majority of Claymont Steel's shares. The offer will be followed by a merger at the same price.
The company cautions that this announcement does not constitute an offer to purchase or a solicitation of an offer to sell shares of Claymont Steel.
ABN AMRO Inc. is acting as exclusive financial advisor to Evraz and will be the dealer-manager for the tender offer. Jefferies & Co., Inc., acting as lead financial advisor to Claymont Steel in the transaction, delivered a fairness opinion to Claymont Steel's board of directors. Cleary Gottlieb Steen & Hamilton LLP is acting as legal counsel to Evraz, and Morgan, Lewis & Bockius LLP is acting as legal counsel to Claymont Steel.
Evraz Group SA, one of the largest vertically-integrated steel and mining businesses, produced 16.1 million tonnes of crude steel in 2006. Principal assets include three of the leading steel plants in Russia: Nizhny Tagil (NTMK) in the Urals region and West Siberian (Zapsib) and Novokuznetsk (NKMK) in Siberia, as well as Palini e Bertoli in Italy, Evraz Vitkovice Steel in the Czech Republic, and Evraz Oregon Steel Mills headquartered in the U.S. Its fast-growing mining businesses comprise Evrazruda, the Kachkanarsky (KGOK) and Vysokogorsky (VGOK) iron ore mining complexes, Yuzhkuzbassugol company, and an equity interest in the Raspadskaya coal company. The mining assets enable Evraz Group to be a vertically-integrated steel producer. Evraz Group also owns and operates the Nakhodka commercial sea port, in the Far East of Russia. Evraz vanadium operations comprise Strategic Minerals Corp., USA, and Highveld Steel and Vanadium Corp., South Africa.
Claymont Steel manufactures and sells custom discrete steel plate in North America. Claymont Steel's headquarters and manufacturing facilities are located in Claymont, Delaware.
