Steel Dynamics subsidiary to buy out Recycle South

FORT WAYNE, Ind.—Steel producer Steel Dynamics Inc. said Friday that a subsidiary has agreed to buy the remaining interest in Recycle South LLC in a cash and stock deal valued at about $370 million to expand its recycled metals business.

Recycle South equity owners will receive about 3.9 million Steel Dynamics shares, which the company valued at about $138 million, and $232 million in cash. The companies value the deal at $500 million, which includes $135 million in debt and other liabilities.

Steel Dynamics subsidiary OmniSource Corp. already owns a 25 percent interest in the Spartanburg, S.C., scrap metal recycling company. The transaction will significantly expand Steel Dynamics' recycled metals business, the company said. The additional capacity will bring the company's total annual ferrous scrap processing capacity to about 7 million tons. Steel producers use recycled scrap to make steel. "Ferrous" refers to iron and iron-based compounds.

The boards of both companies have unanimously approved the transaction. Subject to regulatory approval, the deal is expected to close before the end of the second quarter.

Recycle South has 600 employees and operates in 19 locations throughout the Carolinas and Georgia. The company will operate as a division of OmniSource and will be called OmniSource Southeast. All current management will remain in place, Steel Dynamics said.

Steel Dynamics shares closed at $36.17 on Thursday.