SEATTLE (Scrap Monster): Brazilian steelmaker Gerdau S.A. announced that it has entered into definitive agreements with Dominican Republic-based asset management firm INICIA Group to sell its stakes in Latin American subsidiaries. It must be noted that INICIA Group is Gerdau’s partner in these joint ventures.
According to securities filing, the $325 million deal will see the steelmaker divest its stake in the Diaco S.A. JV including its subsidiaries as well the Gerdau Metaldom Corp. JV and its subsidiaries, in which it currently holds 49.85 % and 50% stakes respectively.
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According to Gerdau, the two joint venture companies operate in various Latin American countries such as Colombia, the Dominican Republic, Panama and Costa Rica. The assets held by the JVs own long steel production facilities with capacity of up to 360,000 tons in addition to rolling capacity of approximately 1.25 million tons. The combined operations have reportedly generated an EBITDA of around $134 million.
The company expects the deals to close during the initial half of the current year, subject to approval by regulatory bodies, including Colombia’s antitrust body.
The divestment decision is in line with the company’s previously announced strategy to allocate capital in assets with long term potentials. It has been divesting non-core assets in order to fund those assets which promises to deliver long-term value creation.
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