Gerdau Ameristeel Corp. has signed a merger agreement to acquire Chaparral Steel Co. for around $4.22 billion.
Chaparral's board of directors unanimously approved the transaction and will recommend to Chaparral Steel Company's shareholders that they vote in favor of the offer.
Chaparral is the second largest producer of structural steel products in North America and a major producer of steel bar products. It operates two mini-mills: one in Midlothian, Texas; the other in Dinwiddie County, Va. Combined, the mini-mills have a combined capacity level of slightly less than 3 million metric tons a year.
Mario Longhi, GNA's President and CEO said, "The acquisition of Chaparral Steel Co. is consistent with Gerdau Ameristeel's strategy to further diversify its product offering into high value added steel products. This strategic combination is an excellent fit for us and it broadens our product portfolio and gives us a full range of structural steel products. As a premium steel asset, Chaparral brings not only high quality products and assets but also a strong organization with excellent technical capabilities."
Andre Johannpeter, president and CEO of the Gerdau Group commented, "This transaction reaffirms our strategy to participate in the global steel consolidation. As we have indicated previously, Gerdau Ameristeel provides our platform for growth in North America. We have a history of successfully integrating businesses and capturing synergies through the implementation and execution of the Gerdau Business System."
Gerdau Ameristeel is the second largest mini-mill steel producer in North America with annual manufacturing capacity of over 9 million tons of mill finished steel products. In addition to 17 mini-mills (including one 50% owned joint venture mini-mill), the company operates 17 scrap recycling facilities and 51 downstream operations, Gerdau Ameristeel serves customers throughout North America.
The merger agreement follows an announcement by Chaparral, earlier this spring, to look at the possibility of selling itself. To do it, Chapararal hired Goldman, Sachs & Co., to explore strategic opportunities for the company.