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Signature Group Holdings Signs Pact to Buy GRSA Business of Aleris for $525 Million [Manufacturing Close - Up](Manufacturing Close - Up Via Acquire Media NewsEdge) Signature Group Holdings reported that it has entered into a definitive stock purchase agreement to acquire the Global Recycling and Specification Alloys (GRSA) business of privately-held Aleris Corp. for $525 million. In its release on Oct. 17, Signature Group Holdings said its Board of Directors of Signature unanimously approved the proposed transaction. The Company noted that the transaction is subject to customary closing conditions, including regulatory approvals and clearance under the Hart-Scott Rodino Antitrust Improvements Act. Signature said this marks its entry into the resurgent aluminum market in North America and Europe. The Company reports that GRSA, an independent aluminum recycler, is positioned to take advantage of improving fundamentals reshaping global aluminum markets. Sectors such as automotive, aerospace, packaging, building and construction are all experiencing increased aluminum consumption. The automotive sector, in particular, is consuming more aluminum as government mandates require reduced carbon emissions and compel auto manufacturers to increase fuel efficiency. "This deal is transformative for Signature in an industry I know well," said Craig Bouchard, Chairman and Chief Executive Officer of Signature. "GRSA is the low-cost producer and clear market leader on two continents, with strong growth prospects and a sustainable competitive advantage. We are particularly pleased to inherit a blue chip customer base. This transaction fulfills a promise made to our stockholders to seek large, accretive, well-valued acquisitions. It is an important step as we continue to build Signature into a significant and profitable company." Signature said it expects to name Terry Hogan, currently senior vice president and leader of Aleris' Recycling and Specification Alloys business in North America, as president of the GRSA business effective upon closing the acquisition. Russell Barr, vice president and leader of Aleris' recycling business in Europe is expected to serve as executive vice president, Europe. "Terry and Russell are excellent managers and leaders with a strong team that is scalable to a larger platform," said Bouchard. Global recycled aluminum consumption is projected to grow 6.7 percent a year over the next decade, compared to primary aluminum consumption at 4.5 percent, according to Freedonia Group. For the 12-month period ended June 30, Aleris reports that GRSA's earnings before interest, taxes, depreciation and amortization, on an adjusted, stand-alone basis ("Adjusted EBITDA") were $74.9 million. Also reported by Aleris, GRSA's Adjusted EBITDA during the quarter ended Sept. 30 is expected to be $4.6 million to $7.6 million higher than the Adjusted EBITDA in the quarter ended Sept. 30, 2013. Approximately 65 percent of GRSA's business is conducted in North America, with 35 percent in Europe. GRSA operates a total of 24 facilities across six countries. Under the terms of the stock purchase agreement, Signature said it will acquire GRSA for a purchase price of $525 million comprised of $495 million in cash and $30 million in preferred stock in Signature. The purchase price represents a multiple of approximately 6.5 times GRSA's Adjusted EBITDA as described above using the midpoint of the estimated improvements in third quarter results. Signature expects to finance the acquisition with a combination of cash on hand, and the net proceeds from debt and equity financings. Deutsche Bank Securities acted as exclusive financial advisor, and Crowell & Moring acted as legal advisor, to Signature. Credit Suisse and KeyBanc Capital Markets acted as financial advisors, and Fried Frank acted as legal advisor, to Aleris. GRSA converts aluminum scrap and dross into usable metal and specification alloys in molten, ingot and other forms. Signature is a North America-based holding company seeking to invest its capital in businesses concentrated primarily in the U.S. industrial and commercial marketplace. More information: http://www.signaturegroupholdings.com ((Comments on this story may be sent to [email protected])) (c) 2014 ProQuest Information and Learning Company; All Rights Reserved. |