Grupo Simec Announces Acquisition of Aceros DM and Grupo San
02/25/2008 - Grupo Simec executes an agreement to acquire 100% of the shares of Corporacion Aceros DM, SA de CV and its Grupo San affiliates.
Grupo Simec, SAB de CV has executed an agreement to acquire 100% of the shares of Corporacion Aceros DM, SA de CV and its Grupo San affiliates.
Grupo Simec, the main subsidiary of Industrias CH, SAB de CV, will acquire 100% of the shares of Grupo San, the second-largest corrugated rebar producer in Mexico. The transaction is valued at 850 million U.S. dollars, 85% of which will be paid with cash generated by the company's operations and by the company's stock public offering, which took place in February 2007.
Grupo San operates a long-products steel minimill based in San Luis Potosi, Mexico, where 1457 employees produce 700,000 tonnes of finished products annually.
With this acquisition, Simec and parent company Industrias CH will become the second-largest producer of rebar and the largest steel producer in Mexico. Together, they will hold a production capacity of approximately 4.5 million tonnes of liquid steel and 3.8 million tonnes of finished products.
The acquisition will also help to diversify ICH and Simec’s corporate product and sales mix. Post-acquisition, 50% of the group’s sales will be in Mexico and 50% outside Mexico, which will allow them to better address the natural cycles of the steel industry at the domestic and global levels. ICH and Simec have identified significant synergies and economies of scale that will increase the company's operating margins. Grupo San's central location in Mexico, where ICH and Simec are not currently present, also provides several strategic benefits mainly related to distribution given its proximity to Mexico's main cities, sea ports, and borders.
The company noted that ICH and Simec will support and promote Grupo San’s aggressive expansion plans in its corrugated rebar business. Grupo San expansion plans are in response to growing demand for this product prompted by the Mexican Government's aggressive infrastructure plan.
The acquisition is subject to the approval of Mexico's federal competition commission, Comision Federal de Competencia, as well as of the shareholders meeting of Grupo Simec.
Grupo San's shareholders were advised by Lehman Brothers, Inc. and by the law office of Galicia y Robles, SC. Grupo Simec was represented by the law office of Mijares, Angoitia, Cortes y Fuentes, SC.
