Steel Dynamics, Inc. and Roanoke Electric Steel Corp. have announced their agreement to a merger in which SDI will acquire Roanoke.

The merger will increase SDI's total steelmaking capability to approximately 5.2 million tons. Roanoke Electric’s product mix — merchant bar, specialty shapes billets, steel joists and rebar — will further diversify Steel Dynamic’s product offering, according to Keith Busse, SDI's President and CEO. The merger “provides additional penetration of the joist, truss and girder markets and provides SDI with its first foray into the processed raw materials arena," says Busse.

The Roanoke Electric group also adds a number of steel fabrication operations to the new organization. "The combination will enable us to broaden our geographic presence and strengthen our relationships with customers. We plan to invest $50 to $80 million to improve and upgrade Roanoke's facilities after the transaction closes."

The Merger Agreement, which has been unanimously approved by the Roanoke Board of Directors, provides that Roanoke stockholders will receive 0.4 shares of SDI common stock and $9.75 in cash for each share of Roanoke stock. At SDI's closing price of $28.77 on October 17, 2005, the per-share consideration to Roanoke is $21.26, a 13.7% premium to Roanoke's closing price on the same day.

The actual value of the per-share consideration at the time of the merger, however, will depend on the value of SDI's common stock at the time of the merger. The aggregate consideration includes the assumption of Roanoke Electric’s net debt, which totaled $41 million as of July 31, 2005.

Completion of the merger is subject to approval by Roanoke's stockholders, regulatory approval, including antitrust approval, and the satisfaction or waiver of customary conditions. The Merger Agreement contains certain termination rights for both parties and further provides for a termination fee to SDI of $7.5 million plus expenses if the transaction is terminated under certain circumstances.

Roanoke Electric Steel Corp. has steel manufacturing facilities in Roanoke, Va., and Huntington, W.Va., producing angles, rounds, flats, channels, beams, special sections and billets, which are sold to steel service centers, fabricators, original equipment manufacturers and other steel producers. Four subsidiaries are involved in various steel-related activities, consisting of scrap processing and bar joists and truck trailer beam fabrication.

Founded in 1993, Steel Dynamics operates three steelmaking mini-mills, which produce a wide range of steel products, including flat-rolled products, such as hot-rolled, cold-rolled and coated steels; wide-flange beams and H-piling; rail; and special-bar-quality round bars. SDI also produces joist and decking products for the non-residential construction markets in two fabrication facilities.