Nucor To Acquire Gallatin Steel

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Sep 15, 2014, 08:30 ET

CHARLOTTE, N.C., Sept. 15, 2014 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) is pleased to announce that it has entered into an agreement to purchase all the equity of Gallatin Steel Company for a cash purchase price of approximately $770 million. Adjusting for the net present value of the anticipated tax benefits, the realized effective purchase price for Nucor is approximately $630 million.

"Our agreement to purchase Gallatin Steel is a significant step forward in the execution of Nucor's strategy for profitable growth. Importantly, Gallatin will enhance Nucor's current position serving flat-rolled customers in the growing pipe and tube segment. We believe this transaction will create excellent value for our shareholders, as the purchase price represents a multiple of approximately 6.4 times estimated 2015 EBITDA before synergies and approximately 5.3 times estimated 2015 EBITDA before synergies net of anticipated tax benefits," said John Ferriola, Chairman, CEO and President of Nucor. "We are both excited and proud to have the men and women of the Gallatin team join our Nucor family."

Strategically located on the Ohio River in Ghent, Kentucky, the flat-rolled products mill, with an annual capacity of approximately 1,800,000 tons, broadens Nucor's footprint in the important Midwest region. Adding Gallatin to Nucor's four existing flat-rolled mills will increase Nucor's total flat-rolled product annual capacity by 16% – to approximately 13 million tons.

"Gallatin is a great fit for Nucor and our sheet mill group. Our two companies have a strong cultural compatibility, particularly the importance and focus we each put on safety, quality and productivity," said Ladd Hall, Executive Vice President of Flat-Rolled Products. "The acquisition will further strengthen our ability to meet the needs of all of our flat-rolled product customers."

Nucor anticipates that this transaction will close promptly after the satisfaction of all closing conditions and the receipt of required regulatory approvals. It is expected to be immediately accretive to cash flow and accretive to earnings after working through purchase accounting-valued finished goods inventories. The acquisition will be funded with available cash and commercial paper borrowings. With its strong balance sheet and healthy cash flow generation, Nucor does not anticipate issuing either long-term debt or equity as result of this purchase.

Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; steel grating and expanded metal; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.

Certain statements contained in this news release are "forward-looking statements" that involve risks and uncertainties. The words "believe," "expect," "project," "will," "should," "could" and similar expressions are intended to identify those forward-looking statements. Factors that might cause the Company's actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: (1) the sensitivity of the results of our operations to prevailing steel prices and the changes in the supply and cost of raw materials, including scrap steel; (2) market demand for steel products; (3) energy costs and availability; and (4) competitive pressure on sales and pricing, including competition from imports and substitute materials. These and other factors are discussed in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's December 31, 2013 Annual Report on Form 10-K, Item 1A. Risk Factors. The forward-looking statements contained in this news release speak only as of this date, and Nucor does not assume any obligation to update them.

SOURCE Nucor Corporation