– Liberty Steel Group’s $28m bid represents the preferred cash bid for Bayou Steel
– The acquisition will be in alignment with Liberty Steel Group’s GREENSTEEL vision
– Deal would boost Liberty Steel Group US productive capacity to 3 million tons per annum
– Liberty plans upgrades to restore strategic asset before restarting steel making in 2021
Liberty Steel Group, part of the GFG Alliance, announces that it has been named preferred buyer for Bayou Steel Group, the US producer of structural steel and merchant bar which ceased operation and entered administration at the end of September 2019.
Subject to completion of a $28 million deal to acquire the business, Liberty has developed a plan to upgrade and modernise Bayou’s idled steel mill in LaPlace, Louisiana, with a view to re-starting its recycling operations in the second half of 2020 and steel making operations by 2021. The transaction is expected to close on January 31, 2020.
Bayou adds scale to Liberty’s US steel business, which includes existing operations in Illinois, Ohio, New Mexico and South Carolina. The group is pursuing a GREENSTEEL strategy of focusing on renewable sources of energy and recycled materials, with a view to moving towards carbon neutral steel production by 2030.
Commenting on the acquisition, Sanjeev Gupta, Executive Chairman of GFG Alliance said:
“We look forward to welcoming Bayou Steel into the GFG Alliance family. While the plant requires upgrades to be restarted competitively, we see good potential for the business. Bayou benefits from reliable access to supplies of recycled steel, competitive power prices and its own deep-water port.”
Bayou Steel was founded in 2016 but the history and operation of steelmaking at its LaPlace facility go back to 1979. The business includes a recycling business which feeds an Electric Arc Furnace (EAF) with downstream rolling operations capable of producing long products for construction and infrastructure. The business distributes products throughout the US, Canada and Mexico via barge, rail and truck. The plant has been idled since September 2019 and requires investment before steel making operations can begin again.
Grant Quasha, GFG Alliance’s Chief Investment Officer for North America, said:
“We put together a compelling bid to save the business and we see an excellent fit in terms of our group values, our existing operations in the USA and the wider ambitions of the Liberty Steel Group globally. Our immediate focus will be on restoring the steel recycling supply chain and operations at the facility. Once fully upgraded and operational the business will bring our total production capacity in the US to 3 million tons per annum, moving us closer to our target of an aggregate 5 million tons of steel production in the US.”