|Steel Dynamics Inc. said it will acquire Companhia Siderurgica Nacional’s (CSN) coil processing operation in Terra Haute, Ind., USA, for US$400 million in cash.|
In a statement, Steel Dynamics said the acquisition of the former Heartland Steel facility will boost its companywide flat-roll capabilities to 8.4 million tons annually and augment its portfolio of value-added products, adding lighter gauges and wider widths.
"The acquisition of Heartland represents a step in the continuation of our growth strategy," said Steel Dynamics chief executive Mark D. Millett. "It levers our core strengths, and at the same time fulfills our initiatives to further increase value-added product and market diversification,” he said.
“In combination with our current operations, Heartland brings a tremendous amount of operating flexibility and optionality. As a part of our broader business platform, Heartland is expected to provide numerous synergies with our existing operations.”
Steel Dynamics said the facility has the capability to produce 1 million tons of cold-rolled steel annually and to galvanize 360,000 tons per year. The plant consists 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,” Steel Dynamics said.
“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.”
CSN acquired the business out of Chapter 11 bankruptcy in 2001 for approximately US$50 million. It sources hot-rolled coils from U.S. manufacturers, including Steel Dynamics, as well as from overseas. CSN also had been selling imported coil into the U.S. merchant market.
It said it intends to continue that part of the operation.
“CSN will maintain its commercial import and distribution activities in the North American market, through another subsidiary to be set up for this purpose,” it said.
CSN also said the sale is part of a plan to divest assets and de-leverage its balance sheet.
CSN chief executive Benjamin Steinbruch in fact told the Bloomberg news service as recently as last week that the company was on the verge of shedding assets.
“I promised investors to succeed in the de-leveraging of CSN, and I want to deliver on this by July,” he told Bloomberg.