SDI and Roanoke announce merger agreement
Steelmakers Steel Dynamics Inc. (SDI) and Roanoke Electric Steel Corporation announced they have reached a merger agreement in which SDI will acquire Roanoke, increasing SDI's total steel making capability to approximately 5.2 million tons.
In the agreement, Roanoke stockholders will receive 0.4 shares of SDI common stock and $9.75 in cash for each share of Roanoke stock outstanding at the time of the merger.
At SDI's closing price of $28.77 on October 17, the per share consideration to Roanoke is $21.21, 13.7 percent higher than Roanoke's closing price on the same day. The actual value of the per share consideration will depend of the value of SDI's common stock at the effective time of the merger.
The consideration includes the assumption of net debt, which was $41 million as of July 21, 2005.
Shortly after the merger was announced, Roanoke chairman and CEO Donald Smith said, “Steel Dynamics is a fast-growing, respected leader in the domestic steel industry with first-rate operations, an outstanding safety record, a diverse product line and a large customer base. This agreement is the best fit for our organization and is the best outcome to secure the long-term success of Roanoke Electric Steel.”
SDI spokesperson Fred Warner told SteelOrbis that the company does not plan on closing any mills and that the Roanoke facilities will continue with current operations.
He said that as for full completion of the deal, “We don't have a targeted date. 90 days would be nice but that would depend on regulatory approvals and so forth.”
The merger, unanimously approved by Roanoke's Board of Directors, is dependant upon approval by Roanoke's stockholders, regulatory approval, including antitrust approval, and the satisfaction or waiver of customary conditions.
The agreement contains termination rights for both parties and also provides a termination fee to SDI of $7.5 million plus expenses if the transaction is terminated under certain circumstances.
Roanoke Electric Steel Corporation has facilities in Virginia and West Virgina at which it manufactures angles, rounds,
flats, channels,
beams, special sections and billets, which are sold to steel service centers, fabricators, original equipment manufacturers and other steel producers. Four subsidiaries are involved in various steel-related activities, consisting of
scrap processing and bar joists and truck trailer beam
fabrication.