Olympic Steel Inc has announced that it entered into a merger agreement with Chicago Tube and Iron Company, a Delaware corporation and the holders of a majority of CTI's outstanding common shares. The merger agreement provides that, upon the terms and subject to the conditions set forth in the merger agreement, Olympic will acquire all of the outstanding common shares of CTI and CTI will become a wholly owned subsidiary of Olympic.
The transaction purchase price is USD 150 million in cash, plus the assumption of approximately USD 6 million of indebtedness. The purchase price is subject to a cash and working capital adjustment.
Upon completion of the transaction, Dr Donald McNeeley president & COO of CTI will enter into an five year employment agreement with Olympic and is expected to become a member of Olympic's board of directors.
Mr Michael D Siegal chairman & CEO of Olympic Steel said that "We are thrilled to welcome CTI to the Olympic Steel family. Our patience and strong balance sheet have been rewarded with the addition of CTI and its complimentary financial strength and values. The acquisition of CTI provides a compelling value for our combined customers, suppliers, employees and shareholders. CTI is expected to be immediately accretive to our earnings. We are excited to enhance our commercial opportunities, as we add the combined companies' product offerings to our expanded customer base. CTI also increases our distribution footprint with its network of ten operations. With our other recently announced expansions, Olympic and CTI combined will operate from 30 locations to serve our growing customer base."
He added that "Critical to our purchase decision was that CTI's senior management will stay with the ongoing operation. We also want to express our thanks and gratitude to Mr Bob Haigh, CTI's Chairman and CEO, who will be retiring in November 2011, after more than 40 years of successful leadership of CTI and the steel service center industry."
The merger agreement provides for customary representations, warranties and covenants, including, among others, that each party will use commercially reasonable efforts to complete the Transaction. Concurrently with the execution of the merger agreement, Olympic entered into non compete agreements with key stockholders of CTI. The non competition agreements provide for customary non solicit, non compete and confidentiality covenants in favor of Olympic.
The completion of the transaction is subject to the satisfaction of a number of customary conditions, including the expiration of waiting periods and the receipt of approvals under the Hart Scott Rodino Antitrust Improvements Act. The parties expect the Transaction to close on July 1st 2011, at which time Olympic anticipates that it will conduct a conference call and simulcast.
