Gerdau sells part of US rebar ops to CMC

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Tuesday, January 2, 2018

Brazilian steel group Gerdau sold some of its rebar steel mill and fabrication assets in the US to Texas-based Commercial Metals Company (CMC) in a deal worth US$600mn, the companies said in separate releases on Tuesday.

The combined assets have a 2.5Mt/y rolling capacity and include mills in the states of Florida (Jacksonville), Tennessee (Knoxville), California (Rancho Cucamonga) and New Jersey (Sayreville).

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"We are selling the US rebar operations as part of our global transformation, in order to be more profitable in an extremely competitive steel market," Gerdau's executive vice-chairman, André Gerdau Johannpeter, said.

"This deal represents an important milestone in our strategy to reduce financial leverage and focus on better return opportunities in the markets where we operate," the executive added.

ASSET SALES

Gerdau's assets sales in the last few years brought in at least US$1.19bn, according to calculations by BNamericas.

In the face of falling profitability Gerdau implemented a broad reorganization program in 2Q15 to mitigate the impact of Brazil's worsening economic conditions and the flood of cheap steel imports from China.

The program included a strategy of acquiring meaningful businesses or disposing loss-making ones to improve profitability.

Gerdau Johannpeter (pictured), who stepped down as CEO to become executive vice-chairman on January 1 as part of a new corporate governance structure, affirmed recently that the company would continue with its asset optimization program.

Porto Alegre-based Gerdau is the largest long steel producer in the Americas.