FORT WAYNE, Ind., June 30, 2016 /PRNewswire/ -- Steel
Dynamics, Inc. (NASDAQ-GS: STLD) today announced that it has
entered into a definitive agreement to acquire 100% of Vulcan
Threaded Products, Inc. ("Vulcan"). Established in 1978,
Vulcan is based outside of Birmingham,
Alabama and is the nation's largest manufacturer and
supplier of threaded rod products, and also produces cold drawn and
heat treated bar. Steel Dynamics plans to purchase Vulcan for
$126 million, inclusive of
$42 million in working capital, which
is subject to typical post-closing adjustments. The purchase
price will be paid in cash from available funds. The
transaction is expected to be immediately accretive to 2016
earnings and cash flow per share.
"During 2015, we identified the pursuit of higher-margin
downstream business opportunities that utilize our steel products
in their manufacturing processes, as one of our target growth
objectives," stated Mark D. Millett,
President and Chief Executive Officer. "A strategy intended to
reduce volatility during both strong and weak market cycles, given
steel raw material supply optionality. During weak steel
demand environments these businesses could purchase steel
internally from our own mills, thus increasing SDI's steel mill
utilization. As a consumer of special-bar-quality products
currently produced at our Engineered Bar Products Division, Vulcan
depicts this model perfectly and fits well within our core
operating strengths."
Vulcan has a diversified product line, evenly distributed
amongst threaded steel rod, cold finished bar processing and heat
treated bar. It shipped approximately 89,000 tons of these
products during the trailing twelve month period ended March 31, 2016. Historically Vulcan has purchased
nearly 20,000 tons of steel from the company's Engineered Bar
Products Division ("EBD"). Based on capabilities, Steel
Dynamics believes this internal volume could grow in the near term
to between 30,000 and 50,000 tons, or just under ten percent of
EBD's total 2015 shipments.
"Vulcan has been a valued customer of our Engineered Bar
Products Division for over a decade. I congratulate Bill and Kent Upton on the creation of a
tremendous company and team. We are looking forward to
welcoming the employees and customers of Vulcan into the Steel
Dynamics family. We are excited to add the quality of Vulcan's
brand and products to our portfolio," concluded Millett.
The transaction is valued at approximately 5.0 times trailing
twelve month March 31, 2016 EBITDA,
excluding potential income tax-related benefits. 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 by August 2016.
About Steel Dynamics, Inc.
Steel Dynamics, Inc. is one of the largest domestic steel
producers and metals recyclers in the
United States based on estimated annual steelmaking and
metals recycling capability, with annual sales of $7.6 billion in 2015, approximately 7,500
employees, and manufacturing facilities primarily located
throughout the United States
(including six electric-arc-furnace steel mills, ten steel coating
lines, an iron production facility, approximately 75 metals
recycling locations and eight steel fabrication plants).
Forward-Looking Statement
This press release contains some predictive statements about
future events, including statements related to the operation of new
or existing facilities. These statements, which we generally
precede or accompany by such typical conditional words as
"anticipate," "intend," "believe," "estimate," "plan," "seek,"
"project" or "expect," or by the words "may," "will," or "should,"
are intended to be made as "forward-looking," subject to many risks
and uncertainties, within the safe harbor protections of the
Private Securities Litigation Reform Act of 1995. These statements
speak only as of this date and are based upon information and
assumptions, which we consider reasonable as of this date,
concerning our businesses and the environments in which they
operate. Such predictive statements are not guarantees of future
performance, and we undertake no duty to update or revise any such
statements. Some factors that could cause such forward-looking
statements to turn out differently than anticipated include:
(1) the effects of uncertain economic conditions;
(2) cyclical and changing industrial demand; (3) changes
in conditions in any of the steel or scrap-consuming sectors of the
economy which affect demand for our products, including the
strength of the non-residential and residential construction,
automotive, appliance, pipe and tube, and other steel-consuming
industries; (4) fluctuations in the cost of key raw materials
(including steel scrap, iron units, and energy costs) and our
ability to pass-on any cost increases; (5) the impact of
domestic and foreign import price competition;
(6) unanticipated difficulties in integrating or starting up
new or acquired businesses; (7) risks and uncertainties
involving product and/or technology development; and
(8) occurrences of unexpected plant outages or equipment
failures.
More specifically, we refer you to Steel Dynamics' more detailed
explanation of these and other factors and risks that may cause
such predictive statements to turn out differently, as set forth in
our most recent Annual Report on Form 10-K under the headings
Special Note Regarding Forward-Looking Statements and Risk Factors,
in our quarterly reports on Form 10-Q or in other reports
which we from time to time file with the Securities and Exchange
Commission. These are available publicly on the SEC website,
www.sec.gov, and on the Steel Dynamics website,
www.steeldynamics.com.
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SOURCE Steel Dynamics, Inc.