Olympic Steel, Inc. Announces the Acquisition of Chicago Tube and Iron Company
May 18, 2011 12:00 AM Eastern Time
CLEVELAND, May 18, 2011 (GLOBE NEWSWIRE) — Olympic Steel, Inc. (“Olympic”) (Nasdaq:ZEUS), a national metals service center, today announced that it entered into a merger agreement (“Merger Agreement”) with Chicago Tube and Iron Company, a Delaware corporation (“CTI”) 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 (the “Transaction”), and CTI will become a wholly-owned subsidiary of Olympic.
The Transaction purchase price is $150 million in cash, plus the assumption of approximately $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 and 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.
“We are thrilled to welcome CTI to the Olympic Steel family,” stated Michael D. Siegal, Chairman and Chief Executive Officer of Olympic Steel. “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.
“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 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 (“Non-Competition Agreements”). 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 1, 2011, at which time Olympic anticipates that it will conduct a conference call and simulcast.
Founded in 1954, Olympic Steel is a leading U.S. metals service center focused on the direct sale and distribution of large volumes of processed carbon, coated, aluminum and stainless steel flat-rolled sheet, coil and plate products. Headquartered in Cleveland, Ohio, the Company operates strategically located processing and distribution facilities in North America. For further information, visit the Company’s web site at http://www.olysteel.com.
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Founded in 1914, CTI is one of the largest steel service centers in the United States, with ten operations throughout the Midwest. Inventory, fabrication and processing is facilitated in over 1.2 million square feet of efficient, state-of-the-art facilities. CTI inventories over 30,000 line items of tubing, pipe, bar, valves and fittings from some of the world’s premier manufacturers. Its 90-plus year history of consecutive profitability has provided the necessary capital resources for growth, thus ensuring consistent, reliable customer service.
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “may,” “will,” “anticipate,” “should,” “intend,” “expect,” “believe,” “estimate,” “project,” “plan,” “potential,” or “continue,” as well as the negative of these terms or other similar expressions. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those implied by such statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Such risks and uncertainties include, but are not limited to: the ability to successfully close the Transaction on July 1, 2011 or at all; the ability to successfully integrate CTI and achieve the expected results of the Transaction, including, without limitation, the Transaction being accretive; the ability to retain CTI’s management team and CTI’s relationships with customers and suppliers; the successful start-up of recently announced expansion plans; and general and global business, economic, financial, credit and political conditions. Further information on these and other risks and uncertainties is provided under Item 1A “Risk Factors” of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which disclosure is incorporated herein by reference, and elsewhere in reports that the Company files or furnishes with the SEC. This release speaks only as of its date and the Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. You are advised, however, to consult any further disclosures the Company makes on related subjects in its reports filed with or furnished to the SEC.
Richard T. Marabito
Chief Financial Officer
Telephone: (216) 292-3800
Fax: (216) 292-3974