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Rail News Home M&A

10/19/2005



Rail News: M&A

Steel Dynamics to acquire rival Roanoke Electric Steel



Steel Dynamics Inc. (SDI) recently reached a merger agreement with Roanoke Electric Steel Corp. under which SDI will acquire the steelmaker that operates plants in Roanoke, Va., and Huntington, W.Va. The merger will increase the steelmaking capability of SDI — which operates three steel mills and produces various steel products, including rail — to about 5.2 million tons.

Roanoke stockholders will receive 0.4 shares of SDI common stock and $9.75 in cash for each share of outstanding Roanoke stock they own at the time of the merger. SDI also will assume Roanoke’s net debt, which totaled $41 million on July 31.

The merger is subject to approval by Roanoke stockholders, and various regulatory and antitrust agencies. SDI plans to spend between $50 million and $80 million to upgrade Roanoke’s facilities after the transaction closes.

Roanoke Chairman and Chief Executive Officer Donald Smith — who planned to retire in February 2006 — will retire after the transaction closes. Roanoke President and Chief Operating Officer T. Joe Crawford will serve as vice president and general manager of SDI’s Roanoke Electric Steel Division. Tim Duke will serve SDI as VP and remain president of Steel of West Virginia Inc., which will become a SDI subsidiary.

“This combination further diversifies SDI’s product offering, provides additional penetration of the joist, truss and girder markets, and provides SDI with its first foray into the processed raw materials arena,” said SDI President and Chief Executive Officer Keith Busse in a prepared statement.

Morgan Stanley and Jefferies & Co. served as financial advisors to SDI and Roanoke, respectively.


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