Nucor acquires 50% equity interest in Vale's subsidiary

Nucor Corporation recently reached agreements to acquire majority ownership position in California Steel Industries, Inc. ("CSI"). Under the agreement, Nucor will acquire a 50% equity stake in a subsidiary of Vale S.A. and a 1% equity stake in JFE Steel Corporation. CSI will be a joint venture between Nucor and JFE, subject to regulatory approvals. Under the terms of the deal, Nucor will pay Vale a cash purchase price of $400 million for its 50% stake, adjusted for net debt and working capital at closing, which equates to a historical average EBITDA of about 6.0 times.

The acquisition will be Nucor's second joint venture with JFE, following an automotive steel joint venture in which it has operated in Mexico since 2020.

Nucor noted that the acquisition will expand its geographical reach in sheet steel and strengthen its presence on the West Coast. It will also strengthen NUE's portfolio, create opportunities for increased internal shipments and enable it to provide sheet steel products to sub-sectors in the region, such as Verco and Hannibal Industries.

CSI has five product lines consisting of hot rolled, acid coated and lubricated, cold rolled, galvanized and ERW pipe and serves end use segments covering customers in the construction, service center and energy sectors.

Nucor's shares increased by 117.9% last year, compared to the industry's 36.5% rise. The company's estimated earnings growth rate for the current year was set at 583.2%.