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Steel Dynamics to acquire CSN Heartland flat roll operations

2018-05-15

Steel Dynamics Inc announced that it has entered into a definitive agreement to acquire Companhia Siderurgica Nacional LLC from CSN Steel SLU, a wholly-owned subsidiary of Companhia Siderurgica Nacional. Located in Terre Haute, Indiana, Heartland produces various types of higher-margin, flat roll steel by further processing hot roll coils into pickle and oil, cold roll, and galvanized products. Steel Dynamics has agreed to purchase Heartland for $400 million in cash inclusive of $60 million of normalized working capital, subject to customary transaction purchase price adjustments.
Heartland has the annual capability to produce 1.0 million tons of cold roll steel, with galvanizing capacity of 360,000 tons. Heartland is comprised of a continuous pickle line, a cold mill, and a galvanizing line. The equipment has been upgraded, well-maintained, and is in excellent operating condition. Historically, Heartland has been operated at low utilization, primarily focusing on galvanized products. Future plans are to utilize the full capacity of the facility, providing high quality cold roll, pickle and oil, and galvanized products. The geographic proximity to Steel Dynamics' other flat roll operations and certain fabrication locations provides opportunities related to logistics and production efficiencies throughout the supply chain and customer network.

Steel Dynamics believes the purchase price approximates current replacement value. The transaction is expected to be accretive to near-term earnings and cash flow per share. The acquisition will expand Steel Dynamics' annual flat roll steel shipping capacity to 8.4 million tons and total shipping capability to 12.4 million tons. The additional exposure to lighter-gauge and greater width flat roll steel offerings will broaden the Company's value-added product portfolio, enhancing Steel Dynamics position as a leading North American steel producer.

Mark D Millett, Chief Executive Officer, said "The acquisition of Heartland represents a step in the continuation of our growth strategy. It levers our core strengths, and at the same time fulfills our initiatives to further increase value-added product and market diversification. We look forward to welcoming the Heartland employees and customers into the Steel Dynamics family, and working with them to drive future growth and success.

Source : Strategic Research Institute, SteelGuru