Steel Dynamics announces $1.6B acquisition

Steel Dynamics (Logo courtesy: http://www.steeldynamics.com/)
Steel Dynamics (Logo courtesy: http://www.steeldynamics.com/)

FORT WAYNE, Ind. (WANE) – Steel Dynamics announced Monday a $1.6 billion acquisition of Mississippi-based Severstal Columbus.

The acquisition will increase Steel Dynamics operating base with 3.4 million tons of hot roll steel production capacity, the company announced in a statement.

Steel Dynamics’ will now be able to serve high margin customers in the OCTG and automotive sectors and will also build a geographic market position in the southern U.S.

The deal is subject to customary transaction purchase price adjustments and will be funded with available cash and debt, according to the company.

“The acquisition of Columbus represents a significant step in the continuation of our growth strategy,” stated Chief Executive Officer,Mark Millett in a Monday morning press release. “It leverages our core strengths, and at the same time fulfills our initiatives to further increase value-added product and market diversification.  We enthusiastically look forward to welcoming the Columbus employees and customers into the Steel Dynamics family, and working with them to drive future growth and success.”

Severstal Columbus is one of the newest and most technologically advanced mini-mills in North America.

From Steel Dynamics:

Overview of Columbus

Columbus is one of North America’s newest mini-mills with an estimated annual hot roll production capacity of 3.4 million tons and 645 employees.  Columbus produces a broad range of high-quality hot-rolled, cold-rolled and galvanized sheet products for customers primarily in the distributor, construction, automotive and pipe and tube markets.  Columbus is strategically located in Mississippi to serve the high-growth markets in the Southern U.S. and Mexico, providing geographic diversification and growth opportunities for Steel Dynamics.

Initial construction for Columbus commenced in October 2005 with plant commissioning in August 2007 and first coil shipment in September 2007.  Between August 2007 and November 2011, a second electric arc furnace, ladle metallurgy furnace, caster, tunnel furnace, hot dip galvanizing line and a heavy gauge push pull pickle line were added.

Transaction Details

The transaction has been approved by the boards of directors of each of Steel Dynamics and OAO Severstal.  The transaction is subject to customary conditions and receipt of regulatory approvals.  Steel Dynamics expects to obtain all necessary regulatory approvals and complete the transaction prior to year end.

The purchase price will be paid in cash and is subject to customary working capital adjustments dependent upon the exact date of closing.  The transaction is supported by a fully committed $1.0 billion bridge facility provided by Goldman Sachs.  Steel Dynamics expects that the permanent financing for the transaction, which will include a combination of available cash on hand and new debt, will allow it to maintain its current credit rating.

Goldman Sachs acted as exclusive financial advisor to Steel Dynamics and Barrett & McNagny LLP acted as legal advisor.

About Steel Dynamics, Inc.

Steel Dynamics, Inc. is one of the largest domestic steel producers and metals recyclers in the United States based on current estimated annual steelmaking and metals recycling capability, with annual sales of $7.4 billion in 2013, over 6,800 employees, and manufacturing facilities primarily located throughout the United States (including five existing steel mills, six steel processing facilities, two iron production facilities, over 90 metals recycling locations and six steel fabrication plants).

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