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Gerdau to Acquire MacSteel from Quanex
11/20/2007 - Brazil-based Gerdau Group signs definitive agreement for the acquisition of Quanex Corp.’s MacSteel business for US$ 1.458 billion in cash, plus the assumption of debt and certain liabilities.
The Gerdau Group has signed a definitive agreement for the acquisition of Quanex Corp.’s MacSteel business for US$ 1.458 billion in cash, plus the assumption of debt and certain liabilities.
According to Gerdau, the investment is part of the Group’s global growth strategy in the long specialty steel market, the main consumer of which is the automotive industry. Gerdau will pay the purchase price with existing cash.
MacSteel is the second-largest long specialty steel producer in North America, with an annual production capacity of 1.2 million tonnes of steel and 1.1 million tonnes of rolled products. It operates three steel mills, located in Jackson and Monroe, Mich., and Fort Smith, Ark., plus six downstream mills in the states of Michigan (two), Ohio, Indiana (two), and Wisconsin. The business includes approximately 1600 employees.
“With MacSteel, the Gerdau Group strengthens its position as a global special bar quality (SBQ) supplier, with production in Brazil, Spain, and the U.S. This is one more step for Gerdau as an agent of the consolidation of the global steel industry, and also in the specialty steel sector, which has the automotive industry as its main consumer”, stated Gerdau Group President and CEO André Gerdau Johannpeter. This acquisition will make Gerdau Group the second-largest producer of long specialty steel in the world, positioning it to better serve its global customer base.
According to Gerdau, MacSteel will open new long specialty steel growth opportunities for the Group in the U.S., one of the largest and most traditional auto industry markets in the world. Around 80% of MacSteel’s production—all of which is special bar quality (SBQ)—is for the automotive industry.
MacSteel is the second-largest long specialty steel producer in North America, with an annual production capacity of 1.2 million tonnes of steel and 1.1 million tonnes of rolled products. It operates three steel mills, located in Jackson and Monroe, Mich., and Fort Smith, Ark., plus six downstream mills in the states of Michigan (two), Ohio, Indiana (two), and Wisconsin. The business includes approximately 1600 employees.
“With MacSteel, the Gerdau Group strengthens its position as a global special bar quality (SBQ) supplier, with production in Brazil, Spain, and the U.S. This is one more step for Gerdau as an agent of the consolidation of the global steel industry, and also in the specialty steel sector, which has the automotive industry as its main consumer”, stated Gerdau Group President and CEO André Gerdau Johannpeter. This acquisition will make Gerdau Group the second-largest producer of long specialty steel in the world, positioning it to better serve its global customer base.
According to Gerdau, MacSteel will open new long specialty steel growth opportunities for the Group in the U.S., one of the largest and most traditional auto industry markets in the world. Around 80% of MacSteel’s production—all of which is special bar quality (SBQ)—is for the automotive industry.
The Gerdau Group plans to coordinate MacSteel’s business from Brazil. The Group, which has already established a reputation for long specialty steel production, operates plants as the Gerdau Aços Especiais Piratini mill in Brazil, and Sidenor in Spain and Brazil, of which it holds a 40% stake.
Prior to the acquisition, Quanex will spin off its Building Products business as a stand-alone company called Quanex Building Products. Gerdau will then acquire all outstanding shares of Quanex common stock at a price of US$39.20 per share. Subject to the approval of Quanex’s shareholders, regulatory approvals and other customary closing conditions, closing of the transaction is to take place immediately after the spin-off.
Prior to the acquisition, Quanex will spin off its Building Products business as a stand-alone company called Quanex Building Products. Gerdau will then acquire all outstanding shares of Quanex common stock at a price of US$39.20 per share. Subject to the approval of Quanex’s shareholders, regulatory approvals and other customary closing conditions, closing of the transaction is to take place immediately after the spin-off.
"Gerdau will provide an excellent home for Quanex's Vehicular Products business as it continues to grow its steel presence in North America,” said Quanex Chairman and CEO Raymond A. Jean. “Additionally, this combination will provide the scale to compete more effectively in the increasing globalization of the vehicular industry.”
The Quanex Board of Directors has unanimously approved the transaction and is expected to recommend that the company’s shareholders vote in favor of the offer. The transaction is expected to be completed by the end of the first quarter of 2008.
Citigroup Global Markets Inc. acted as the exclusive financial advisor to the Gerdau Group on this transaction and Simpson Thacher and Bartlett LLP acted as legal advisors for the transaction.
The Quanex Board of Directors has unanimously approved the transaction and is expected to recommend that the company’s shareholders vote in favor of the offer. The transaction is expected to be completed by the end of the first quarter of 2008.
Citigroup Global Markets Inc. acted as the exclusive financial advisor to the Gerdau Group on this transaction and Simpson Thacher and Bartlett LLP acted as legal advisors for the transaction.
The Gerdau Group is the largest long steel producer in the Americas, and the fourteenth-largest steelmaker in the world. It has over 35,000 employees and operates in 13 countries: Argentina, Brazil, Canada, Chile, Colombia, the Dominican Republic, India, Mexico, Peru, Spain, the United States, Uruguay, and Venezuela. It has an annual steel production capacity of 23.2 million tonnes and is one of the largest recyclers in the Americas.
Quanex Corp., with estimated fiscal 2007 sales of approximately $2 billion, is an industry-leading manufacturer of value-added, engineered materials and components serving the vehicular products and building products markets.
