Apr 16 2007
Essar Global Limited, through its wholly owned subsidiary Essar Steel Holdings Limited, (“Essar”) and Algoma Steel Inc. (“Algoma”) today announced that they have signed a definitive arrangement agreement providing for the acquisition by Essar of all of the common shares of Algoma for Cdn$56.00 per share, or an aggregate equity value of $1.85 billion, payable in cash. The offer price represents a premium of 48% to Algoma’s volume weighted average stock price for the 20-day period ending on February 14, 2007 when Algoma confirmed that it was in discussions regarding a potential transaction.
Under the terms of the agreement, Algoma will undertake a court approved plan of arrangement pursuant to which an Essar subsidiary will acquire all of the shares of Algoma in consideration for Cdn$56.00 in cash per share. The arrangement must be approved by Algoma’s shareholders by the affirmative vote of at least 66 2/3rds percent of the votes cast, in person or by proxy, at a shareholders meeting, and is subject to customay closing conditions including necessary regulatory approvals. The support agreement provides for payments to Essar in the event that the acquisition is not completed under certain circumstances.
Mr. Benjamin Duster, Chairman of Algoma’s Board of Directors said, “The Board of Directors unanimously supports the Essar proposal as it reflects a significant premium to the historical share price of Algoma. This transaction will also benefit Algoma’s employees and the City of Sault Ste. Marie as it will result in new ownership that is committed to investment in Algoma’s facilities to support growth and business sustainability.”
Mr. Shashi Ruia, Chairman, Essar Global Limited said, “We believe Algoma is an excellent addition to our existing steel business and also offers growth potential. This acquisition fits in with our global steel vision of having world class low cost assets, with a global footprint. Algoma provides us with an excellent platform for the Canadian and North American markets. We are impressed with Algoma’s management team and employees and look forward to working with them to enhance our industry leadership.”
Algoma expects that the shareholders meeting to approve the arrangement will be held in June and that the acquisition will be completed shortly thereafter if approved by the shareholders. The Board of Directors of Algoma has unanimously recommended that Algoma shareholders vote in favour of the transaction. Genuity Capital Markets is acting as exclusive financial advisor to Algoma in the transaction and has delivered an opinion to Algoma’s Board of Directors that the consideration to be received by Algoma shareholders is fair, from a financial point of view.