Gerdau Steel's Acquisition and Growth Mode Continues

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). In line with its aggressive acquisition and growth strategy, Gerdau S.A. (NYSE:GGB) (Porto Alegre, Brazil) has announced the creation of a major North American steel presence to be known as Gerdau AmeriSteel Corporation. Once approved by regulators and shareholders, the new company will combine the steel minimill assets of current Gerdau operations, including AmeriSteel Corporation, which was acquired by Gerdau in September of 1999, with the operations of Co-Steel Incorporated (TSX:CEI) (Whitby, Ontario).

Gerdau currently has about 11 million tons of annual steel making capacity in the Americas and with the reverse takeover of Co-Steel that number will increase to about 14.6 million tons annually. This includes the addition of Co-Steel mills in New Jersey, Ontario, and a 50% ownership of the 2.5 million ton per year Gallatin Steel mill located in Kentucky. (Click the image on the right to view the North American Gerdau steel mill locations) With the acquisition of Co-Steel, Gerdau will have tripled its steel making capacity since 1998.

Gerdau operates ten mills in South America, which produce about 7.5 million tons per year. With the acquisition of Co-Steel, the company will double its North American capacity adding 3.6 million tons, and will have almost the same steelmaking capacity in North America as in its home continent of South America. The company will have 11 mills in North America with capacity of around 7.1 million tons a year.

Gerdau announced earlier this year that it would spend $114 million to upgrade Acos Finoos Piratini and Siderurgica Guaira, two of its mills in Southern Brazil. The company is also in the development phase for the construction of a new $200 million, one million ton per year mill in Aracariguama, Brazil.