Gerdau S.A. Proposes to Acquire Minority Shares in Gerdau Ameristeel
06/03/2010 - Gerdau S.A. has delivered to the Board of Directors of Gerdau Ameristeel a proposal to acquire all shares of Gerdau Ameristeel Corp. that it does not already own for US$11.00 cash per share. The Board has unanimously determined that it would support a transaction at the price, subject to finalization of definitive documentation for the transaction.
Gerdau S.A. has delivered to the Board of Directors of Gerdau Ameristeel a proposal to acquire all shares of Gerdau Ameristeel Corp. that it does not already own for US$11.00 cash per share.
This proposal values Gerdau Ameristeel's minority held shares at about US$1.6 billion. Gerdau S.A. already owns 66.3% of the outstanding shares of Gerdau Ameristeel and intends to fund the acquisition and related expenses through its existing cash resources and committed financing.
The Gerdau Ameristeel Board of Directors has established a Special Committee of independent directors to supervise the preparation of a formal valuation and oversee the finalization of a definitive agreement in connection with the proposal.
The Special Committee has retained RBC Capital Markets as its independent valuator. RBC has delivered its valuation to the Special Committee, which concludes that the value of the common shares of Gerdau Ameristeel is in the range of US$11.00 to US$13.00 per share.
RBC has also delivered its opinion that the consideration under the proposal of US$11.00 per share is fair from a financial point of view to the shareholders of Gerdau Ameristeel, other than Gerdau S.A. and its related parties. The price of US$11.00 per share represents a premium of 53.4% to the closing share price of Gerdau Ameristeel on the NYSE on June 1, 2010, and a premium of 45.9% to the 30-day volume weighted average price of the shares on the NYSE.
The Board of Directors of Gerdau Ameristeel—having considered the unanimous recommendation of the Special Committee—has unanimously determined that it would support a transaction at the price contemplated by the proposal, subject to finalization of definitive documentation for the transaction.
"We believe this transaction represents an excellent opportunity for Gerdau Ameristeel's public shareholders to monetize their holdings at a price that represents full and fair value and is in the best interests of Gerdau S.A. and Gerdau Ameristeel, its public shareholders and other stakeholders," said Jorge Gerdau Johannpeter, Chairman of the Board of Directors of Gerdau S.A.
The transaction would be implemented pursuant to a plan of arrangement, and a management information circular would be prepared and mailed for a special meeting of Gerdau Ameristeel shareholders that would be held early in the third quarter of 2010. The Board of Directors of Gerdau Ameristeel has established June 18, 2010, as the record date for determining shareholders entitled to vote at the special meeting.
J.P. Morgan is acting as exclusive financial advisor to Gerdau S.A. in the context of this transaction.
Gerdau S.A. is the leading producer of long steel in the Americas and one of the world's largest suppliers of special long steel. It has plants in 14 countries spanning the Americas, Europe, and Asia, with total installed capacity of more than 25 million tonnes of steel. It is the largest recycler in Latin America, transforming millions of tonnes of scrap into steel every year.
Gerdau Ameristeel is the second largest mini-mill steel producer in North America, with annual manufacturing capacity of approximately 10 million tonnes of mill-finished steel products. Through its vertically integrated network of mini-mills, scrap recycling facilities, and downstream operations, Gerdau Ameristeel serves customers throughout the United States and Canada. Its products are generally sold to steel service centers, steel fabricators, or directly to OEMs for use in a variety of industries, including nonresidential, infrastructure, commercial, industrial and residential construction, metal building, manufacturing, automotive, mining, cellular and electrical transmission and equipment manufacturing.
