Commercial Metals Co. (CMC) on Tuesday said it agreed to buy certain U.S. rebar steel mill and fabrication assets from Brazilian steelmaker Gerdau S.A. (GGB) for $600 million in cash.
Commercial Metals said the acquisition includes 33 rebar fabrication facilities in the U.S., along with steel mills in Tennessee, Florida, New Jersey and California, with annual mill rolling capacity of 2.5 million tons.
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Irving, Texas-based Commercial Metals said it will have about 7.2 million tons of global melt capacity at the close of the transaction, which it expects will yield about $40 million in annual pretax operational synergies.
Gerdau said the sale is part of its efforts to be more profitable in an "extremely competitive steel market," adding that the deal is "an important milestone in our strategy to reduce financial leverage and focus on better return opportunities in the markets where we operate."
Commercial Metals said the transaction, which is supported by a fully committed $600 million long-term facility, will add to earnings and cash flow within the first year. The deal is expected to close before the end of 2018.
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(END) Dow Jones Newswires
January 02, 2018 11:09 ET (16:09 GMT)