Brazil steelmaker Gerdau to buy out Ameristeel for $1.7-billion

Gerdau SA, Latin America's largest steelmaker, yesterday said it planned to take full control of its US subsidiary, Gerdau AmeriSteel, by acquiring the shares it does not already own, in a $1.7 billion cash deal.

Porto Alegre, Brazil-based Gerdau, which holds 66.3 per cent stake in Florida-based Gerdau Ameristeel Corporation, made an offer to acquire the remaining stake in the company at $11 per share - representing a premium of 53 per cent over Tuesday's close, valuing the company's minority shares at $1.7 billion.

Analysts say that Gerdau is offering an attractive premium considering that the US market for steel is dull as the US economy is still shrugging off the effects of the world's worst recession.

Gerdau Ameristeel, having an annual finished products capacity of 10 million tonnes, is the second-largest mini-steel mill in North America, but like all other steel mills in the US, suffered during the downturn and hit its bottom line.

Its revenues shrunk from $8.5 billion in 2008 to $4.2 billion in 2009 and posted a net loss of $162 million last year, with a major part of it related to interest exposure.

Gerdau has installed capacity of more than 25 million tonnes of steel from its plants in 14 countries spanning the Americas, Europe and Asia, including a joint venture with India's Kalyani Steel.