The operation, entirely in cash, will "immediately" increase the profit per share of the Spanish steel company

Acerinox has closed an agreement to acquire 100% of the American special alloys company Haynes International for an amount of 798 million dollars (740.3 million euros), which will be paid entirely in cash.

The operation has been agreed by the boards of directors of both companies and could be executed in the middle of this year if it receives the necessary authorizations, as the Spanish company reported this Monday to the National Securities Market Commission (CNMV).

Acerinox has highlighted that, with this transaction, it will "consolidate its presence in the North American market", as well as "its pre-eminence in the world market for high-performance alloys".

The board of directors of Haynes will submit to its shareholders the sale of 100% of its securities to Acerinox, for which the Spanish company will pay 61 dollars per share in cash (56.58 euros per share), which means valuing the company at 970 million dollars (almost 900 million euros).

This price of $61 per share represents a premium of 8.7% to the current value of Haynes shares and approximately 22% to the volume-weighted average price over the past six months.

As Acerinox explained to the CNMV, if the sale agreement were accepted by the majority of Haynes shareholders, it will be obligatory for all and they will receive the agreed amount in cash, that is, 61 dollars per share (56.58 euros).

If approved, Indiana-based Haynes will become 100% owned by North American Stainless, in turn 100% owned by Acerinox.

The agreement includes a plan for Haynes to reinvest $200 million (€185.5 million) over the next four years in new joint operations in North America to create an integrated HPA and stainless steel platform.

Acerinox estimates that the operation will involve synergies of 71 million dollars (65.8 million euros), the majority derived from that investment of 200 million dollars.

IMPACT ON THE ACCOUNTS: IT WILL IMMEDIATELY INCREASE THE EARNINGS PER SHARE

The Spanish company plans to finance the transaction with available liquidity from its balance sheet. This includes the absorption of Haynes' debt and other adjustments of approximately 172 million dollars (159.5 million euros).

The Spanish company expects its pro forma debt to reach 1.5 times Ebitda in 2024, to decrease to 1.2 times in 2025, in line with the company's objective throughout the cycle.

Additionally, Acerinox estimates that the operation will increase its earnings per share "immediately" in the first year under its control, even before the estimate of annual synergies of 71 million dollars (65.8 million euros) materializes. . Additionally, a return on capital employed (ROCE) of 15% is expected in the first year.

HAYNES WILL STOP LISTING ON THE NASDAQ

The transaction will be subject to prior authorization by the United States competition authorities and its Foreign Investment Committee. Acerinox estimates that, depending on the date of obtaining this authorization, the operation could be carried out in the third quarter of this year.

Once the transaction is closed, Haynes shares will no longer be listed on the Nasdaq and Haynes will become a wholly controlled subsidiary of Acerinox.

The CEO of Acerinox, Bernardo Velázquez, highlighted that this acquisition reinforces the company's global position in high-performance alloys and "creates significant opportunities in the aerospace segment, which is enjoying strong growth and in the attractive US market."

"This acquisition is aligned with Acerinox's strategy to improve our exposure to value-added products with an emphasis on excellence and sustainability, taking advantage of our successful acquisition of VDM Metals in 2020," said Carlos Ortega Arias-Paz, president of the board of directors of Acerinox.

For his part, Michael L. Shor, president and CEO of Haynes, stressed that the operation provides "very attractive" value for his company and its shareholders. "Acerinox is a great partner for Haynes' future with access to additional capital, resources and expertise to continue building on our current momentum," added Robert H. Getz, Chairman of the Board of Directors of Haynes.

The transaction will elevate both companies' operational capabilities in the United States, creating a local sales and distribution network with 14 new international locations, while also including "a significant patent portfolio," including 17 patents and published applications. in United States.

Acerinox has received financial advice from Goldman Sachs Bank Europe SE and legal advice from Paul, Weiss, Rifkind, Wharton