Steel Dynamics, Inc. (STLD) announced that it has completed the acquisition of Severstal Columbus, LLC (Columbus) for $1.625 billion in cash, with customary transaction purchase price adjustments. The buyout was funded with $350 million of available cash, $1.2 billion of new senior unsecured notes and borrowings on the company's revolving credit facility.
The acquisition will expand Steel Dynamics' annual steel shipping capacity to 11 million tons, representing a roughly 40% rise. Steel Dynamics will get an exposure to the high-growth oil country tubular goods and automotive markets with the addition of Columbus. Further, being located in Mississippi, Columbus provides geographic diversification and growth opportunities for Steel Dynamics.
In Jul 2014, Steel Dynamics reported earnings of 31 cents per share for the second quarter of 2014 compared with 13 cents per share registered in the year-ago quarter. The results beat the Zacks Consensus Estimate by a penny. Profit jumped around two-and-a-half-fold year over year to $72 million.
Operating income increased 90.6% year over year and 63% sequentially to $132 million in the quarter. The sequential increase was due to higher profitability across all its segments. The company’s sales were $2,069.8 million in the quarter, up 14.9% year over year.
Steel Dynamics remains optimistic about increasing demand for its products. The company also expects recent growth projects to contribute to its earnings. The automotive and manufacturing markets remain strong and the company believes that domestic energy investments will continue to strengthen.
Steel Dynamics currently carries a Zacks Rank #2 (Buy).
Other companies in the steel industry with favorable Zacks Rank include Grupo Simec S.A.B. de C.V. (SIM), TimkenSteel Corp. (TMST) and United States Steel Corp. (X). All of them sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment