In a statement, Pennsylvania-based Universal Stainless said its board unanimously voted to reject the offer.

"The Universal Stainless board determined that Synalloy’s unsolicited offer has no merit, either financial or strategic, for the stockholders of Universal Stainless and that it does not see a basis for further discussions with Synalloy regarding the unsolicited offer at this time."

Earlier in the day, Synalloy, which makes pipe, tube, chemicals and storage tanks, announced that it had acquired a 3 percent stake in Universal Stainless and had made the offer to merge, arguing that together, the companies would be a leading supplier of specialty steel products capable of generating US$475 million in annual revenue. 

"We believe that a combination of Synalloy and Universal Stainless offers immediate as well as future value to both shareholder groups.  Product lines, distribution channels, end markets served and geographic proximity of manufacturing facilities provide opportunities for cost savings and new business development. Additionally, the elimination of duplicative corporate overhead and related public company costs is estimated at US$3 million annually,” said Synalloy president and chief executive Craig Bram. 

Details of the offer haven’t been disclosed, but Synalloy said it was rebuffed because Universal Stainless didn’t believe the proposed exchange ratio reflected its true value and because it thought the value of proposed synergies had been overstated. 

"Synalloy is open to discussing the exchange ratio, but we are confident that the synergies that can be realized from a merger go well beyond the elimination of duplicative corporate overhead,” Bram said. 

Synalloy closed Thursday at US$11.25 per share; Universal Stainless closed at US$19.60 per share.