Sanjeev Gupta’s GFG Alliance buys US’s KCI for $320 million
GFG Alliance, part of Sanjeev Gupta’s Liberty House, says the acquisition of US-based steelmaker KCI is a step towards a proposed IPO of Liberty Steel USA
London: British-Indian industrialist Sanjeev Gupta’s GFG Alliance on Wednesday announced the purchase of Texas-based Keystone Consolidated Industries Inc. (KCI) from Contran Corp. London-headquartered GFG Alliance’s group company Liberty Steel USA has acquired KCI, including all its subsidiaries, for $320 million.
The GFG Alliance said the addition of KCI to its group company Liberty Steel USA creates one of the country’s largest producers of wire rod and provides a platform for GFG Alliance to grow its US GreenSteel capacity to five metric tonnes per annum by 2020.
“Today is an exciting milestone in our ambitious journey in the United States. I warmly welcome all Keystone employees to the global GFG family,” said GFG executive chairman Sanjeev Gupta.
“The long history, strong management, excellent work force and industry position of KCI will pair well with our existing Georgetown plant and will serve as a strong base for our continued expansion to 5mmtpa of steel capacity in the region,” he said.
Gupta said the year 2019 will be an exciting one for his company as it plans to continue to grow its presence across North America and access the public markets.
The latest deal was supported by large North American banks including Wells Fargo NA and BMO Harris Bank (BMO Harris), along with funds managed by BlackRock Financial Management Inc.
GFG Alliance said it would help pave the way towards a proposed US IPO of Liberty Steel USA, which will be led by Credit Suisse.
The transaction follows closely on the completion of Liberty Aluminium’s $500-million purchase of Dunkirk, Europe’s largest aluminium smelter, which was arranged by Bank of America Merrill Lynch (BofA-ML) and a syndicate of top tier international banks.
Grant Quasha, chief investment officer (North America) of the GFG Alliance, said: “Following the expansion of Liberty’s steel business in the US, we look forward to working with partners to introduce other GFG businesses to the region including GFG’s extensive resources, power and financial services arms.”
The company said its acquisition of KCI reinforces GFG Alliance’s credentials as a significant foreign direct investor in North America. It said the business is moving into a new regional head office on Madison Avenue in New York as it targets several other major investment opportunities in the North American industrial, energy and financial sectors.
“I’m excited that KCI is joining the GFG group and what this means for the future of the company, its market leading brands, its employees and its customers. GFG is the best possible new parent and partner for KCI’s storied history and future growth,” Keystone Consolidated Industries CEO Chris Armstrong said. “I look forward to being a part of GFG’s unparalleled international growth and to continue KCI’s expansion of its steel and value-added operations in the US and the region.”
The KCI acquisition is expected to strengthen Liberty House’s position in the US market with the addition of a top-producing wire rod facility with a 1.1 million tonne capacity electric arc furnace (EAF), the market leading agricultural fence products of RedBrand, industrial wire, an MBQ/SBQ bar mill, three welded wire reinforcement mesh facilities and a PC strand facility.
KCI will be combined with Liberty Steel Georgetown to give Liberty Steel USA a total of up to 1.8m tonnes per annum of EAF melting capacity, 2 million tonnes per annum of wire rod rolling capacity, significant value-added downstream businesses and over 1,300 employees. The combined company will have operations in Illinois, Ohio, South Carolina, New Mexico, Texas and Georgia.
Liberty—advised by Deutsche Bank Securities Inc., Wyelands Capital Ltd, Norton Rose Fulbright US and Alvarez & Marsal—said the total USD 320-million cost of purchase includes the acquisition by Liberty of certain liabilities.
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