Australia's largest steelmaker Bluescope Steel (BSL) rose by almost 5% this morning after it said it will expand its operations in North America by acquiring US steel maker IMSA Steel Corp for $850 million
IMSA, which makes steel products for the non-residential construction market, had sales in 2006 of $1.4 billion and earnings before interest, tax, depreciation and amortisation of $100 million.
Bluescope will be acquiring IMSA from NYSE-listed Ternium SA, which has steel operations in Mexico, Venezuela and Argentina.
The deal is subject to regulatory approval and Bluescope has agreed to pay a break fee of $US20 million to Ternium SA if the agreement is terminated in certain circumstances.
"The acquisition greatly accelerates Bluescope Steel's North American strategy allowing us to significantly broaden our scope and geographic reach," said Bluescope Steel managing director and CEO Paul O'Malley.
"It fits squarely with the Bluescope blueprint announced on 29 November by giving the company an expanded presence in North American building products and solutions market," he said.
Mr O'Malley said the deal will help develop the company's downstream North-American multi-brand, multi-channel strategy and will make Bluescope Steel a leader in the North American steel building and construction market.
"Bluescope Steel expects to realise approximately US$40 million per annum of synergies within three years."
Bluescope said the acquisition was expected to be earnings per share neutral, pre-AIFRS (Australian equivalents to International Financial Reporting Standards) adjustments, in fiscal 2008 but accretive, pre and post AIFRS from fiscal 2009.
By 1:00PM AEST Bluescope had dropped back slightly, trading up by 3.67% or 33 cents at $9.33.
