Brazilian Gerdau merger with Canadian Co-Steel
Brazilian long steel group Gerdau announced on August 13, 2002 plans to merge its North American assets with Canadian steel company Co-Steel.
The merger is valued at around Cdn$600million ($380million). It will combine the firms' complementary operations and increase their product mix. The resulting company will have estimated revenues of $1.7billion per year. It will have 11 mills with annual
manufacturing capacity in excess of 6.8 million tons of finished steel products. Co-Steel will issue 146 million common shares to acquire Gerdau's steel holdings in
North America: Gerdau Courtice Steel, based in Cambridge, Ontario; Gerdau MRM Steel, based in Selkirk, Manitoba; and AmeriSteel, based in Tampa, Florida.
The new entity will be renamed Gerdau AmeriSteel Corporation. Existing Co-Steel shareholders will own 26% of the outstanding shares of the new company and Gerdau will retain the other 74%.
Jorge Gerdau Johannpeter, the group's chairman expressed, "For Gerdau, this merger represents an important step in the unification of its holdings and a substantial increase in the company's commitment to the attractive North American market. The unification of two quality organizations with comparable traditions and corporate images is an exciting event and a positive step towards a brighter future,"
Operating synergies will result in $23million in cost savings without any major investment, the Canadian company said.
The merger is scheduled to be completed in the final quarter of this year after approvals from shareholders, creditors and regulatory officials.
Co-Steel manufactures and markets
merchant bar, structural shapes, reinforcing bar,
wire rod and flat rolled steel used principally in the
construction,
automotive, appliance, machinery and equipment industries.
Porto Alegre-based Gerdau is the largest long product steel maker in the Americas, with operations in
Brazil,
Canada, the United States,
Argentina,
Uruguay and
Chile, and installed capacity of 11 million tons.