Commercial Metals (CMC) entered into a definitive agreement to acquire certain US rebar steel mill and fabrication assets from Gerdau 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, TN; Jacksonville, FL; Sayreville, NJ and Rancho Cucamonga, CA, 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 US. 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.
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.