Acerinox (a leading global company in the manufacturing and distribution of stainless steel and high-performance alloys) announced that it has entered into a definitive agreement under which Acerinox’s wholly-owned U.S. subsidiary – North American Stainless (NAS) will acquire Haynes International, a U.S. leading developer, manufacturer, and marketer of technologically advanced high-performance alloys, in an all-cash transaction.
Under the terms of the deal, Acerinox will acquire all the outstanding shares of Haynes for $61.00 per share in cash, which represents a fully diluted equity value of $798 million and a premium of approximately 22% to Haynes’s six-month volume-weighted average share price for the period ending February 2, 2024. The all-cash deal values Haynes at an enterprise value of approximately $970 million. The Boards of Directors of Haynes and Acerinox have unanimously approved the deal.
These are the deal highlights:
— Strengthens Acerinox’s global leadership position in the high-performance alloy segment
— Expands Acerinox’s strong presence in the U.S. market and creates new opportunities in the aerospace sector, which are attractive and high-growth end markets
— Includes plan for Haynes to reinvest c.$200 million over the next four years in the newly combined U.S. business, mostly in Haynes’s Kokomo operations, in order to create an integrated HPA and stainless steel platform
— Offers estimated annual synergies of $71 million, the majority of which will be unlocked through the benefits generated by the c.$200 million investment
— Creates additional value through the combination of complementary businesses, including expansion of U.S. operating capabilities and a worldwide sales and distribution network with 14 additional locations internationally
— Offers a strong platform to accelerate growth in high-performance alloys and specialty stainless in North America
— Adds extensive R&D capabilities and significant patent portfolio, including 17 U.S. patents and published applications
— Builds upon Haynes’s historical and expected financial performance to deliver significant pro forma growth and margin enhancements
— Haynes brings strong relationships and close proximity to customers, delivering high quality customer service and strong customer retention
— Expands highly talented and experienced management and operating teams in the U.S. with Haynes’s proven track record of execution
— Strong ESG performance and commitments to be further enhanced under Acerinox’s ownership
Deal Details
Acerinox plans to finance the deal using existing available cash on its balance sheet. And the deal includes the absorption of Haynes’s debt and other adjustments of approximately $172 million. The pro-forma debt of Acerinox is expected to reach 1.5x NFD/EBITDA in 2024, and then fall to 1.2x in 2025, in line with Acerinox’s target through the cycle.
The deal is expected to be immediately accretive to Acerinox’s earnings per share in its first year of ownership, even prior to the realization of $71 million in estimated annual synergies. Plus, the return on capital employed (ROCE) target of 15% is expected to be reached in year one.
The deal has been unanimously approved by the Boards of Directors of both companies and is expected to close in the third quarter of 2024, subject to receipt of regulatory approval and the satisfaction of customary closing conditions, including approval by Haynes shareholders. Upon completion of the transaction, Haynes’s shares will no longer be traded on the Nasdaq, and Haynes will become a wholly owned subsidiary of Acerinox.
KEY QUOTES:
“Haynes has impressive and complementary business operations, R&D capabilities, and an experienced team. Their addition to Acerinox strengthens our global leadership in high-performance alloys and creates meaningful opportunities in the high-growth aerospace segment and the attractive U.S. market. I look forward to welcoming Haynes as part of our team and working together to enhance our combined operating footprint in North America.”
– Bernardo Velázquez Herreros, Chief Executive Officer of Acerinox
“This acquisition is aligned with Acerinox’s key strategic priority of enhancing our focus on value-added products with an emphasis on excellence and sustainability, building on our successful acquisition of VDM Metals in 2020. The Haynes team has built a leading high-performance alloys business that will now be supported by Acerinox’s global operating and financial strength.”
– Carlos Ortega Arias-Paz, Chairman of the Board of Acerinox
“We are excited to announce this combination and are confident that this is the right step to ensure the long-term success of Haynes, while maximizing value for our stockholders. By joining with Acerinox, we will be able to continue to grow and enhance our operations, especially with the additional $200 million investment into the combined company’s U.S. operations, including $170 million into our operations with the vast majority invested in Kokomo, Indiana. We look forward to our people and our local communities realizing the benefits of this transaction.”
– Michael L. Shor, President and Chief Executive Officer of Haynes
“This transaction provides a highly attractive value for our Company and our stockholders, and is a direct result of Haynes’ continued innovation and business accomplishments under the leadership of Michael Shor, his team and our dedicated workforce. Acerinox is a great partner for the future of Haynes with access to additional capital, resources and expertise to continue to build on our existing momentum.”
– Robert H. Getz, Chairman of the Board of Haynes
