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Ryerson to be Acquired by Platinum Equity
07/25/2007 - Ryerson enters into a definitive merger agreement to be acquired by Platinum Equity in a transaction valued at approximately $2.0 billion.
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The announced merger agreement is the result of a process initiated earlier this year, when Ryerson’s board of directors retained UBS Investment Bank to assist in comparing the company's current strategic plan with other alternatives that could create additional value, including a sale of the company.
As a part of this process, over 50 potential acquirers were identified and contacted, including foreign and domestic mills and service centers, as well as financial buyers. All interested parties were invited to perform due diligence and were provided extensive access to company management, financial data and facilities before submitting proposals.
Following a thorough review and analysis of internal options and external proposals, the board determined that accepting the Platinum proposal was in the stockholders’ best interests.
The merger agreement permits Ryerson, with the assistance of its advisors, to solicit superior proposals from other parties through August 18, 2007. The company notes that there can be no assurances that the solicitation will result in an alternative transaction.
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Under terms of the agreement, all of the outstanding shares of Ryerson common and convertible preferred stock will be acquired for $34.50 per share in cash. This purchase price represents a 15% premium over Ryerson's closing share price of $30.01 on February 13, 2007 (the day prior to the announcement of the Board's review of strategic alternatives) and a 45% premium over Ryerson's closing share price of $23.77 on December 13, 2006 (the day that Harbinger Capital made a filing with the Securities and Exchange Commission indicating it was considering taking a number of actions regarding its investment in Ryerson).
“This transaction is a strong validation of the company's accomplishments over the years as well as our future growth prospects,” said Ryerson Chairman and CEO Neil Novich. “Additionally, Platinum Equity brings the operating expertise and capital that will allow Ryerson to build upon our successes, execute the strategic plan and grow the business.”
“Ryerson has a great history and also great potential,” said Tom Gores, Platinum Equity’s Founder and Chairman. “It's a good fit for Platinum, which brings an operational focus that will help the company build value in the future."
The acquisition, which will be conducted through an affiliate of Platinum Equity, has been unanimously approved by Ryerson's Board of Directors, which is now recommending approval of the transaction by Ryerson's stockholders.
Jacob Kotzubei, the Platinum Equity executive leading the transaction, said he expected the public-to-private transition to be seamless. “Platinum Equity is extremely excited about what the executive management team and dedicated employees have created at Ryerson,” said Kotzubei. “We are looking forward to working together with the entire team at Ryerson, as well as its customers and vendors, to create additional value through Platinum's unique operations- focused approach.”
Subject to the approval of Ryerson's stockholders and customary closing conditions, the acquisition is expected to be completed by the fourth quarter of 2007. The transaction is not subject to any financing condition. Stockholders will be asked to vote on the proposed transaction at a special meeting that will be held in the near future.
UBS Investment Bank served as Ryerson's financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel to Ryerson.
Ryerson Inc. is a leading distributor and processor of metals in North America, with 2006 revenues of $5.9 billion. The company services customers through a network of service centers across the United States and in Canada, Mexico, India, and China.
Platinum Equity is a global M&A&O(R) firm specializing in the merger, acquisition, and operation of companies that provide services and solutions to customers in a broad range of business markets, including information technology, telecommunications, industrials, logistics, manufacturing, and entertainment distribution. Since its founding in 1995 by Tom Gores, Platinum Equity has completed more than 70 acquisitions with more than $16 billion in aggregate annual revenue at the time of acquisition.
