IRVING, Texas, Jan. 2, 2018 /PRNewswire/ -- Commercial
Metals Company (NYSE: CMC), today announced it has entered into a
definitive agreement to acquire certain U.S. rebar steel mill and
fabrication assets from Gerdau S.A. (NYSE: GGB), a producer of long
and specialty steel products in the Americas for a cash purchase
price of $600 million, subject to
customary purchase price adjustments.
The acquisition includes 33 rebar fabrication facilities in
the United States, as well as
steel mills located in Knoxville,
Tennessee; Jacksonville,
Florida; Sayreville, New
Jersey and Rancho Cucamonga,
California, with annual mill rolling capacity of 2.5 million
tons.
Upon completion of the acquisition, CMC will have an expanded
geographic footprint in the largest construction regions in the
U.S. The acquisition will increase CMC's annual rebar and
fabrication capacity and allow for the more efficient utilization
of its asset base to better serve customers. After adding the
incremental 2.7 million tons of melt capacity, CMC will have
approximately 7.2 million tons of global melt capacity at the close
of the transaction.
"This acquisition aligns with our strategy to focus on our
strength in concrete reinforcing products and leverages CMC's core
competencies in rebar production and value added fabrication
services to non-residential construction customers. In
addition, these assets provide us the opportunity to optimize our
product mix more fully in the U.S. As a leader in rebar
manufacturing technology and customer service, we are excited to
take advantage of our expertise to increase throughput, lower costs
and improve the customer experience in our new operations," stated
Barbara Smith, President and CEO of
Commercial Metals Company.
"Over the past several years we have repositioned our portfolio
to focus on our core strengths of vertically integrated steel
manufacturing and fabrication services as well as strengthen our
balance sheet placing us in the optimal position to take advantage
of this unique growth opportunity," continued Smith, "We plan to
invest in these facilities to create efficiencies utilizing our
expertise in the latest innovations for steel manufacturing and
fabrication. We look forward to welcoming the approximately
2,700 employees of these facilities to CMC."
The acquisition is expected to be accretive to earnings and cash
flow within the first year after the transaction closes. Once
fully integrated, the combined operations are expected to generate
approximately $40 million in pre-tax
operational synergies annually.
The transaction has been approved by the boards of directors of
both Commercial Metals Company and Gerdau S.A.. The closing of the
transaction, which is expected to close before calendar year-end
2018, is subject to the satisfaction or waiver of customary closing
conditions, including customary regulatory review. The
transaction is supported by a fully committed $600 million long-term facility.
Investor Conference Call and Webcast
In conjunction with this announcement, Commercial Metals Company
(NYSE: CMC) invites you to listen to its conference call that will
be broadcast live over the Internet today, Tuesday, January 2, 2018, at 11:00 a.m.
Eastern Time (10:00 a.m. Central) with Barbara Smith,
President & CEO and Mary Lindsey, Senior Vice President
& CFO.
The teleconference will also be available via webcast. To
access the webcast (in listen-only mode), please visit Commercial
Metals Company's Web site at www.cmc.com.
About Commercial Metals Company
Commercial Metals Company and its subsidiaries manufacture,
recycle and market steel and metal products, related materials and
services through a network including four electric arc furnace
("EAF") mini mills, an EAF micro mill, a rerolling mill, steel
fabrication and processing plants, construction-related product
warehouses, metal recycling facilities and marketing and
distribution offices in the United States and in
strategic international markets.
Forward-Looking Statements
This news release contains forward-looking statements regarding
the Company's expectations relating to the proposed acquisition,
the timing and financing thereof, the ability to obtain regulatory
approvals and meet other closing conditions for the proposed
acquisition and the financial and operational benefits of the
proposed acquisition. These forward-looking statements generally
can be identified by phrases such as we, CMC or its management
"expects," "anticipates," "believes," "estimates," "intends,"
"plans to," "ought," "could," "will," "should," "likely," "appears"
or other similar words or phrases. These and other
forward-looking statements are based on management's current views
and assumptions and involve risks and uncertainties that could
significantly affect expected results. Although we believe that our
expectations are reasonable, we can give no assurance that these
expectations will prove to have been correct, and actual results
may vary materially. Results may be materially affected by
factors such as: risks associated with acquisitions generally, such
as the inability to obtain, or delays in obtaining, required
approvals under applicable antitrust legislation and other
regulatory and third party consents and approvals; potential
volatility in the capital markets and its impact on the ability to
complete the proposed financing necessary to pay the purchase
price; failure to retain key management and employees; issues or
delays in the successful integration of the acquired operations
with those of the Company, including incurring or experiencing
unanticipated costs and/or delays or difficulties; difficulties or
delays in the successful transition of the acquired operations from
the information technology systems of the sellers to those of the
Company as well as risks associated with other integration or
transition of the operations, systems and personnel of the acquired
operations; future levels of revenues being lower than expected and
costs being higher than expected; failure or inability to implement
growth strategies in a timely manner; unfavorable reaction to the
proposed acquisition by customers, competitors, suppliers and
employees; conditions affecting the industry generally; local and
global political and economic conditions; conditions in the
securities market that are less favorable than expected; and
changes in the level of capital investment, and other risks
described in the Company's filings with the Securities and Exchange
Commission, including the Company's Annual Report on Form 10-K for
the year ended August 31, 2017.
Except as required by law, the Company undertakes no obligation to
update, amend or clarify any forward-looking statements to reflect
changed assumptions, the occurrence of anticipated or unanticipated
events, new information or circumstances or otherwise.
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SOURCE Commercial Metals Company