Nucor to acquire Gallatin Steel

ArcelorMittal, based in Luxembourg, and Brazil-based Gerdau have agreed to sell their respective 50 percent interests in Gallatin Steel, a flat rolled electric arc furnace mill in Gallatin, Kentucky, to Nucor Corp., Charlotte, North Carolina, for $770 million. The mill has an annual capacity of 1.8 million tons. Nucor says the sale is expected to be completed by the end of 2014.

Gallatin Steel began operations in early 1995. Raw materials Gallatin uses include scrap metal, pig iron and hot briquetted iron to produce its flat rolled steel.

“Our agreement to purchase Gallatin Steel is a significant step forward in the execution of Nucor’s strategy for profitable growth,” says John Ferriola, chairman, CEO and president of Nucor. “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 (earnings before interest, tax, depreciation and amortization) before synergies and approximately 5.3 times estimated 2015 EBITDA before synergies net of anticipated tax benefits.”

“The sale of Gallatin unlocks substantial value for ArcelorMittal’s shareholders and is consistent with ArcelorMittal’s stated strategy of selective divestment of non-core assets,” says Adita Mittal, chief financial officer of ArcelorMittal. “I would like to thank all our employees in Gallatin for their hard work and commitment during the years that we have co-owned this mill.”

“The decision to sell Gallatin was made in order for Gerdau to focus on its core assets in North America,” says André Gerdau Johannpeter, Gerdau CEO. “On behalf of Gerdau’s management, I would like to express gratitude to the whole team at Gallatin for their efforts in making Gallatin a great company.”

The addition of Gallatin will give Nucor’s five flat-rolled steel mills and will increase the company’s flat-rolled products annual capacity by 17 percent to 13 million tons.