Gerdau Signs Agreement to Sell Texas Wire Rod Mill and Downstream Facilities

SEATTLE (Scrap Monster): Gerdau SA has entered into definitive agreement with Optimus Steel, an affiliate of Jacksonville, Florida-based Wire Mesh Corp. (WMC) to sell its Beaumont, Texas wire rod mill. The sale also includes two downstream locations- Beaumont Wire Products which consist of a wire mesh mill and Carrollton Wire Products, which is a major industrial wire supplier to the greater US Southern market.

The company press release issued by Gerdau states that the transaction is valued at $92.5 million. The deal is subject to regulatory clearances and customary closing conditions and is expected to close before the end of this year. Until the deal is complete, Gerdau will continue to operate the facilities. The financial advisor to Gerdau in this transaction is Goldman Sachs & Co. LLC. Also, Simpson Thacher & Bartlett LLP acts as the legal counsel, press release noted. Meantime, Optimus Steel stated that it will operate the Beaumont wire rod mill, whereas the downstream facilities will be operated by WMC.

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Gustavo Werneck, CEO, Gerdau noted that the decision to sell the wire rod mill is part of its strategic plan to improve the company’s profitability by focusing on more value-added products. The deal is considered as a big step forward in its journey to become the most innovative steel company worldwide. Werneck stated that the company remains committed to strengthening its position in the US over the next few years.

Earlier during the year, Gerdau SA had entered into definitive agreement with Irving, Texas-based Commercial Metals Company to sell off its key US rebar mills, in an all-cash deal worth $600 million. The deal had included four EAF mills and several of its downstream facilities. This transaction is also expected to close before end-2018.