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Steel Dynamics Completes OmniSource Acquisition

10/29/2007 - Steel Dynamics completes its acquisition of OmniSource for approximately $1.1 billion, including $425 million in cash, 9.7 million shares of SDI common stock, and the assumption of approximately $220 million of debt, which was repaid on closing.

Steel Dynamics, Inc. has completed the previously announced acquisition of OmniSource Corp. for approximately $1.1 billion
 
Steel Dynamics’ payment for the privately owned scrap processing and trading company included $425 million in cash, 9.7 million shares of Steel Dynamics common stock (valued at $451 million), and the assumption of approximately $220 million of debt, which was repaid on closing.
 
"We are very pleased to welcome OmniSource management and employees to the Steel Dynamics family," said Keith Busse, Chairman and CEO of Steel Dynamics. "OmniSource becomes an important operating unit, providing significant additional diversification to our business model and offering our shareholders value by facilitating potential future growth in our steel businesses. On a pro forma basis for their fiscal year 2006, the combination of Steel Dynamics and OmniSource would have resulted in 2006 revenues of approximately $5.4 billion.
 
Steel Dynamics has appointed Danny Rifkin, formerly OmniSource President and CEO, as an Executive Vice President of Steel Dynamics reporting to the Chairman and CEO. Rifkin will also serve as President and Chief Operating Officer of Steel Dynamics’ OmniSource subsidiary. He has also been invited to join SDI's Board of Directors.
 
"With regard to the acquisition of OmniSource, we want to clarify that OmniSource will continue to operate much like it has in the past as it expects to maintain its business relationships with a long list of scrap providers and continue to supply ferrous and non-ferrous resources to a wide range of customers, including foundries and steel mills.
 
“For our part, Steel Dynamics expects to continue to purchase scrap from numerous scrap vendors with whom we have developed strong relationships,” continued Busse. “In 2006, Steel Dynamics purchased 516,000 tons of ferrous scrap from OmniSource, accounting for about 10% of OmniSource's ferrous scrap generation and 14% of our scrap purchases. We expect these percentages may grow somewhat over time with SDI's growth in steelmaking, but we have no expectation of OmniSource supplying only to SDI or of SDI obtaining all its scrap from OmniSource. Overall, we see OmniSource as the premier U.S. scrap processor, well-managed and complementing Steel Dynamics well in terms of geography, scrap mix, and operating culture," Busse said.
 
Effective with the acquisition of OmniSource, SDI's existing scrap operations in Virginia, Tennessee, and Indiana will be transitioned to OmniSource.
 
Steel Dynamics will begin to incorporate OmniSource financials into its own results effective at closing. In December, the company will provide updated guidance including its expectations for the effect of the OmniSource acquisition on SDI's fourth quarter operating results.