Aperam has agreed to acquire VDM Metals for 438 million euros ($542 million), the Luxembourg-based steel producer said on Wednesday, in a move to boost its position in high-end alloys.
The share purchase agreement with Falcon Metals and Lindsay Goldberg will unlock about 20 million euros of synergies by 2020 and enhance earnings per share and free cash flow from the first year, Aperam said.
“Whilst maintaining our priority of a strong balance sheet, consistent with investment grade ratios, we are confident that this acquisition will create further value for all Aperam’s stakeholders,” Chief Executive Timoteo Di Maulo said.
VDM Metals will be combined with Aperam’s Alloys & Specialties Division, creating an entity with over 3,000 employees based in 20 countries and pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) of 122 million euros.
The deal, which is expected to be completed in the second half of 2018, will be financed through a mix of available surplus cash and debt, Aperam said.