Steel Dynamics To Buy Zimmer To Support New Flat Roll Mill
Zacks Investment Research | Mar 02, 2020 09:19PM ET
Steel Dynamics, Inc. (NASDAQ:STLD) has entered into a definitive agreement to purchase 100% of the equity interest of Zimmer, S.A. de C.V. The move is part of the company’s raw material procurement strategy to support its new Texas flat roll steel mill.
Based in Monterrey, Mexico, Zimmer operates a nonferrous and ferrous scrap metals recycling business. The company’s operations consist of six scrap processing facilities, which are strategically positioned near high-volume industrial scrap sources across the Central and Northern Mexico. It also operates a number of third-party scrap processing locations. The combined facilities annually ship around 500,000 gross tons of scrap. They have an annual processing capability of roughly 2 million gross tons.
Through the Zimmer acquisition, Steel Dynamics will be able to strengthen its Southwest U.S. and Mexico growth strategy. The addition of Zimmer in the company’s portfolio along with its existing metals recycling presence in Mexico will expand commercial presence in the region. It also strengthens the raw material supply strategy, which will enable cost-effective ferrous scrap procurement for its flat roll steel facility in Texas. Currently, the Texas steel mill facility is under construction and slated to start operations mid-year 2021.
The deal is expected to be funded fully with available cash. Notably, Steel Dynamics ended 2019 with cash and cash equivalents of $1,381.5 million, up nearly 67% year over year.
Shares of Steel Dynamics have lost 28.1% in the past year compared with the Original post
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