GERDAU S.A. PLANS TO ACQUIRE ALL OF GERDAU AMERISTEEL
As a wholly-owned subsidiary, Gerdau Ameristeel could realize global synergies, benefit from additional business development opportunities, and enjoy a lower cost of funding through the parent’s stronger credit ratings.
Posted: June 24, 2010
Gerdau Ameristeel Corporation (Tampa, FL) and Gerdau S.A. announced that Gerdau S.A. has delivered to the Board of Directors of Gerdau Ameristeel a proposal to acquire all of the shares of Gerdau Ameristeel Corporation that Gerdau S.A. does not already own for $11.00 cash per share.
This proposal values Gerdau Ameristeel's minority held shares at approximately $1.6 billion. Gerdau S.A. already owns 66.3 percent of the outstanding shares of Gerdau Ameristeel and intends to fund the acquisition and related expenses through its existing cash resources and committed financing.
The Gerdau Ameristeel Board of Directors has established a Special Committee of independent directors to, among other things, supervise the preparation of a formal valuation and oversee the finalization of a definitive agreement in connection with the proposal.
The Special Committee has retained RBC Capital Markets ("RBC") as its independent valuator for the purpose of providing a valuation in accordance with applicable regulatory requirements. RBC has delivered its valuation to the Special Committee, which concludes that the value of the common shares of Gerdau Ameristeel is in the range of $11.00 to $13.00 per share. RBC has also delivered its opinion that the consideration under the proposal of $11.00 per share is fair from a financial point of view to the shareholders of Gerdau Ameristeel, other than Gerdau S.A. and its related parties. The price of $11.00 per share represents a premium of 53.4 percent to the closing share price of Gerdau Ameristeel on the NYSE on June 1, 2010 and a premium of 45.9 percent to the 30-day volume weighted average price of the shares on the NYSE.
The Board of Directors of Gerdau Ameristeel – having considered, among other things, the unanimous recommendation of the Special Committee – has unanimously determined (the representatives of Gerdau S.A. on the Board of Directors of Gerdau Ameristeel having abstained from voting) that it would support a transaction at the price contemplated by the proposal, subject to finalization of definitive documentation for the transaction.
Once Gerdau Ameristeel is wholly-owned by Gerdau S.A., the combined business would be expected to benefit from additional business development opportunities in the context of Gerdau S.A.'s global strategy. As a wholly-owned subsidiary of Gerdau S.A., Gerdau Ameristeel would be expected to realize global synergies and enjoy a lower cost of funding as a result of Gerdau S.A.'s stronger credit ratings.
Chairman of the Board of Directors of Gerdau S.A., Jorge Gerdau Johannpeter, commented: "We believe this transaction represents an excellent opportunity for Gerdau Ameristeel's public shareholders to monetize their holdings at a price that represents full and fair value and is in the best interests of Gerdau S.A. and Gerdau Ameristeel, its public shareholders and other stakeholders."
It is contemplated that the transaction would be implemented pursuant to a plan of arrangement and that, subject to completion of definitive documentation for the transaction, a management information circular would be prepared and mailed for a special meeting of Gerdau Ameristeel shareholders that would be held early in the third quarter of 2010.
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