Mergers & Acquisitions

CMC Recycling - Cayce, SC

Original Press Release

Commercial Metals Company to Acquire Certain U.S. Rebar Assets from Gerdau

Press release date: Jan 02, 2018

IRVING, Texas, Jan. 2, 2018 - Commercial Metals Company (NYSE: CMC), today announced it has entered into a definitive agreement to acquire certain U.S. rebar steel mill and fabrication assets from Gerdau S.A. (NYSE: GGB), a producer of long and specialty steel products 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, Tennessee; Jacksonville, Florida; Sayreville, New Jersey and Rancho Cucamonga, California, 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 U.S. The acquisition will increase CMC's annual rebar and fabrication capacity and allow for the more efficient utilization of its asset base to better serve customers. After 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.

"Over the past several years we have repositioned our portfolio to focus on our core strengths of vertically integrated steel manufacturing and fabrication services as well as strengthen our balance sheet placing us in the optimal position to take advantage of this unique growth opportunity," continued Smith, "We plan to invest in these facilities to create efficiencies utilizing our expertise in the latest innovations for steel manufacturing and fabrication. We look forward to welcoming the approximately 2,700 employees of these facilities to CMC."

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.

Investor Conference Call and Webcast

In conjunction with this announcement, Commercial Metals Company (NYSE: CMC) invites you to listen to its conference call that will be broadcast live over the Internet today, Tuesday, January 2, 2018, at 11:00 a.m. Eastern Time (10:00 a.m. Central) with Barbara Smith, President & CEO and Mary Lindsey, Senior Vice President & CFO.

The teleconference will also be available via webcast. To access the webcast (in listen-only mode), please visit Commercial Metals Company's Web site at www.cmc.com.

About Commercial Metals Company

Commercial Metals Company and its subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network including four electric arc furnace ("EAF") mini mills, an EAF micro mill, a rerolling mill, steel fabrication and processing plants, construction-related product warehouses, metal recycling facilities and marketing and distribution offices in the United States and in strategic international markets.