Nucor Corporation has recently entered into agreements to take a majority ownership position in California Steel Industries, Inc. (“CSI”). Under the agreement, Nucor will purchase a 50% equity interest 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 financial terms of the agreement, 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 approximately 6.0 times historical average EBITDA.
The acquisition will be Nucor's second joint venture with JFE, following an automotive steel joint venture in which it has been operating in Mexico since 2020.
Nucor noted that the acquisition will expand its geographic reach in steel sheet and strengthen its presence on the West Coast. It will also strengthen NUE's portfolio, creating opportunities for increased inland shipments and enabling it to supply steel sheet products to sub-industries in the region such as Verco and Hannibal Industries.
CSI has five product lines of hot rolled, pickled and lubricated, cold rolled, galvanized and ERW pipe and serves end-use segments that include customers in the construction, service center and energy industries.
Shares of Nucor rose 117.9% last year, compared to the industry's rise of 36.5%. The estimated earnings growth rate of the company for the current year was determined as 583.2%.
source: nasdaq
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