Cargill to sell stake in steel mini-mill joint venture to BlueScope
MINNEAPOLIS – Cargill has reached an agreement to sell its interest in North Star BlueScope Steel LLC (NSBS) to BlueScope Steel (BlueScope). Through the transaction BlueScope will pay $720 million in cash for Cargill’s equity stake in NSBS and will assume $40 million of NSBS net debt.
NSBS is currently a 50-50 joint venture between Cargill and BlueScope. Since 1997, the joint venture has operated a steel mini-mill in Delta, Ohio, producing over 2 million tons of hot rolled steel coils annually. The joint venture is Cargill’s lone remaining steel production investment, with the company having sold its North Star Steel unit in 2004.
Separately, through its Metals Supply Chain business, Cargill remains involved in the global trading, distribution and processing of steel mill consumables and products, including iron ore, hot rolled steel coils, steel billets and reinforcing bar (rebar) steel. Through offices worldwide, it serves customers such as steel mills, processors and end users. Based in Singapore, where it handles all international trading and distribution, the business also operates steel trading and distribution businesses in the U.S. and China, and steel service centers in Florida, Illinois, Indiana, Oklahoma, Tennessee and Texas. These facilities process flat rolled steel for use by industrial manufacturers.
Paul O’Malley, BlueScope managing director and chief executive officer, said “North Star has delivered consistent financial performance and strong returns on invested capital to BlueScope. This transaction will give us 100-percent ownership of an asset that is highly regarded within the U.S. steel sector; full ownership enhances BlueScope’s portfolio value and optionality and improves business flexibility. The North Star business delivers on our strategy of being cost competitive in steelmaking and is best in class.”
Peter Hawthorne, Cargill vice president of Strategy and Business Development and chair of the joint venture’s board of directors, said: “Cargill has been pleased with the performance of the NSBS team in Delta and the financial results of the joint venture. We have chosen to sell our interest in the joint venture to redeploy this capital elsewhere in Cargill’s portfolio and are confident in the team’s continued success under new ownership.”
Completion is not subject to regulatory approvals and is targeted for October 2015.
J.P. Morgan Securities LLC is acting as financial adviser, and Mayer Brown is acting as legal adviser to Cargill on the transaction.
Lori Johnson, 952-742-6194, [email protected]
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