Steel Dynamics Inc., Fort Wayne, Ind., has entered into a definitive agreement to acquire Heartland Steel, Terre Haute, Ind., a wholly-owned subsidiary of Companhia Siderurgica Nacional. Heartland produces various types of higher-margin, flat-rolled steel by further processing hot-rolled coils into pickle-and-oil, cold rolled, 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. 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.
Heartland has the capability to annualLy produce 1.0 million tons of cold-rolled 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-rolled, pickle-and-oil, and galvanized products. The geographic proximity to Steel Dynamics’ other flat-rolled operations and certain fabrication locations provides opportunities related to logistics and production efficiencies throughout the supply chain and customer network.
“The acquisition of Heartland represents a step in the continuation of our growth strategy,” said Mark D. Millett, Chief Executive Officer. “It levers our core strengths, and at the same time fulfills our initiatives to further increase value-added products 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.’
