Steel Dynamics, Inc. and OmniSource Corporation have announced the execution of a definitive agreement whereby Steel Dynamics (SDI) will acquire OmniSource, one of North America’s largest scrap recycling companies.
According to the agreement, which has been unanimously approved by the boards of directors of both companies, Steel Dynamics will acquire all of the outstanding stock of OmniSource Corporation in a transaction valued at slightly more than $1 billion.
OmniSource shareholders will receive 9.7 million shares of Steel Dynamics stock and $425 million in cash. The aggregate transaction value includes the assumption by SDI of certain liabilities, including net debt, which is expected to be approximately $210 million at closing. The transaction is expected to close in November 2007.
OmniSource will operate as a wholly owned subsidiary of Steel Dynamics and will maintain a continuing focus on ferrous and nonferrous scrap processing, brokerage, and industrial scrap management. SDI’s existing scrap operations in Virginia and Tennessee will be consolidated into OmniSource, as will its planned scrap processing facility in Indianapolis, Indiana. The acquisition is expected to result in synergies of approximately $15 million per year.
Danny Rifkin, OmniSource’s current president and CEO, will join the SDI management team as an executive vice president of SDI’s newly formed recycled metals platform. He will continue to lead the OmniSource subsidiary as president and chief operating officer. Rifkin will also be named to SDI’s board of directors.