EMR Inquires About Metal Management Merger

European Metal Recycling Ltd. sent a letter to Metal Management Inc.'s board Aug. 8, proposing that it immediately begin a legal and financial due diligence of Metal Management to pursue a business combination.

European Metal Recycling said there is no guarantee that it will formulate any specific plan or proposal for Metal Management.

The letter appeared in an SEC filing. In the letter, EMR noted, “As we discussed today, we believe that a business combination of EMR and Metal Management would be in the best interests of Metal Management, its stockholders and EMR. As such, we propose that we and our advisors immediately begin a financial and legal due diligence review of the Company. We will, of course, execute a customary confidentiality agreement before beginning that review. “

The firm said its plans for Metal Management may include privately negotiated transactions of Metal Management's securities, open-market purchases, proposing a business combination including a merger, a tender offer or waging a proxy battle.

The filing added that it did not wish to make a hostile takeover attempt. “We have no intention, at this time, to seek to initiate a public offer that is not supported by the Metal Management Board, and we believe that a transaction can be structured that provides fair value to Metal Management’s shareholders.”

While looking at acquiring Metal Management, the letter by EMR concluded, noting that Metal Management already experienced a significant run-up after EMR first became active in significant purchases of its shares.

European Metal Recycling currently owns 1.5 million Metal Management shares for a 14.8 percent stake in the company.