Gerdau Ameristeel to Acquire TAMCO
Gerdau Ameristeel has entered into an agreement with Ameron International, Tokyo Steel and Mitsui & Co. to acquire all the issued and outstanding shares of TAMCO, a California corporation. TAMCO is a minimill steel producer of reinforcing steel bar and is one of the largest rebar mills in the western U.S. with annual capacity of approximately 500,000 tons.
Based in Rancho Cucamonga, TAMCO is the only steel producer of long products in California and serves markets primarily in California, Arizona and Nevada. The purchase price for TAMCO is approximately $165 million in cash. The deal is expected to close this quarter.
"TAMCO will expand Gerdau’s network of minimills in North America, increasing our geographical footprint into the West and our capability to serve the civil construction market in that region,” says Andre B. Gerdau Johannpeter, president and CEO of Gerdau S.A, Gerdau Ameristeel’s parent company.
TAMCO struggled in the last couple years due to the economic recession and the weak construction markets in the West. Its sales dropped from $360 million in 2008 to $85.7 million in 2009. The company suffered an after-tax loss of $12.0 million in 2009 after reporting net income of $22.9 million in 2008.
With its divestiture of 50 percent of TAMCO, Ameron International will focus on its core pipe systems business involved in the transmission of water and corrosive fluids and gases.
“Ameron began evaluating the strategic alternatives for TAMCO in late 2008 due to the long-term demand forecasted for the steel rebar market in the West and, importantly, the shift in competitive dynamics that occurred in the past few years. We concluded that the potential of TAMCO would be more fully realized under the ownership of a full-line, vertically integrated steel company such as Gerdau,” says James S. Marlen, Ameron’s chairman, president and CEO.