Capital market-relevant press releases, 2005-11-28, 03:25 PM
Dofasco and ThyssenKrupp announce a friendly all-cash deal
･ Offer price of C$61.50 per common share - total value of approximately C$4.8 billion (EUR3.5 billion)(1)
･ Dofasco's Board of Directors unanimously recommends acceptance of the offer
･ The acquisition is a major element of ThyssenKrupp's international growth strategy
･ Dofasco and Hamilton, Ontario to become ThyssenKrupp's new North American steel headquarters
Dofasco and ThyssenKrupp today announced they have reached an agreement for ThyssenKrupp to make an offer to acquire all of Dofasco's outstanding common shares in a friendly, all-cash transaction for total consideration of approximately C$4.8 billion (EUR3.5 billion) (1), or C$61.50 per common share. Dofasco's Board of Directors has resolved to unanimously recommend to Dofasco shareholders that they accept the offer. ThyssenKrupp currently owns no shares in Dofasco.
The offer price represents a 40% premium over Dofasco's closing share price on November 22, 2005, the day prior to the announcement by Arcelor of its intention to make an unsolicited offer for Dofasco at C$56.00 per share. It also represents a 9.8% premium over the Arcelor bid. ThyssenKrupp expects the acquisition to be accretive to earnings in the first full year of the combination.
Brian MacNeill, Chair of Dofasco's Board of Directors, said, "The ThyssenKrupp offer recognizes the value of one of the world's most consistently profitable steel producers. The significant premium being offered reflects the strategic value of Dofasco to ThyssenKrupp in accelerating the growth of the combined companies in North America."
Dr. Ekkehard D. Schulz, Chairman of the Executive Board of ThyssenKrupp AG, said: "This premium offer for Dofasco reflects our belief that we will be ideal partners and will unlock significant growth potential for both companies. ThyssenKrupp is very selective about its acquisitions. Strategic fit and the quality of the local employees are our priorities when considering an acquisition. In the case of Dofasco, we win on both counts by advancing our North American strategy and adding the exceptional management team and highly regarded workforce."
<u>Excellent strategic fit</u>
Dofasco and ThyssenKrupp both have a successful history of producing value-added flat steel products and are known for world class customer service. Both companies have pursued a differentiation strategy in the high quality automotive and industrial segments. Each has an excellent performance record and a strong brand.
Hamilton, Ontario will become ThyssenKrupp's new North American headquarters for carbon steel.
Dofasco's outstanding North American footprint provides a complementary fit with ThyssenKrupp's existing steel operations and its growth strategy in North America.
Dofasco President and Chief Executive Officer, Don Pether, commented: "We believe this is an exciting opportunity to unlock value for both companies and for our employees. Combining Dofasco with ThyssenKrupp's North American steel business will enhance the competitive position of the combined companies in NAFTA markets, as well as our presence in key global market segments. It will broaden our product offering, and provide Dofasco and our customers with access to technology and expertise from the global leader in steel innovation."
ThyssenKrupp will provide Dofasco with a strategic partner with a global presence. Within the ThyssenKrupp Group, Dofasco will be given responsibility for the successful positioning and strategic development of ThyssenKrupp Steel in North America. To this end, ThyssenKrupp Steel's existing processing activities in the NAFTA region will also be assigned to Dofasco.
There is very little overlap between the two companies, therefore, the managements of Dofasco and ThyssenKrupp do not anticipate restructuring involving employees or operations, as a result of this transaction.
The acquisition of Dofasco will strengthen ThyssenKrupp's presence in the NAFTA steel market. This acquisition represents a continuation of ThyssenKrupp's internationalization strategy in high-quality flat steel, providing direct access to attractive customer groups such as the automobile and packaging industries. Together the two companies will have the strength of increased size, scale and geographic reach.
ThyssenKrupp has the highest respect for Dofasco's management team and employees, who together have driven the company's impressive performance.
ThyssenKrupp regards the continuity of management as key to integrating Dofasco and realizing its full value within the ThyssenKrupp Group. That is why the Dofasco management team will lead the combined North American carbon steel operations of ThyssenKrupp.
ThyssenKrupp specifically recognizes and supports Dofasco's culture of success which is built on respecting employees, their families and involvement in local communities. This also fits in with longstanding tradition at ThyssenKrupp.
<u>About the Transaction</u>
ThyssenKrupp and Dofasco have entered into a support agreement pursuant to which ThyssenKrupp has agreed to make this premium offer. The two companies anticipate that the offering circular and directors' circular recommending the offer will be mailed to Dofasco shareholders early in December with the offer being open for a period of 35 days following the date of mailing or receipt of applicable regulatory approvals whichever is longer. The offer will be subject to customary closing conditions including the acceptance by shareholders representing a minimum of two-thirds of the outstanding Dofasco shares on a fully diluted basis and the receipt of necessary regulatory approvals including Investment Canada and Competition Act. The support agreement also provides for payments to ThyssenKrupp by Dofasco in the event the acquisition is not completed under certain circumstances. ThyssenKrupp has the necessary funds to complete the transaction from available cash.
Citigroup is acting as financial advisor to ThyssenKrupp and RBC Capital Markets is acting as financial advisor to Dofasco.
Established in 1912, Dofasco employs approximately 11,000 people and is Canada's largest steel producer. Sales in 2004 amounted to C$4.2 billion. Dofasco is a leading North American steel solutions provider. Product lines include hot rolled, cold rolled, galvanized, Extragal(TM), Galvalume(TM), and tinplate flat rolled steels, as well as tubular products, laser-welded blanks and Zyplex(TM), a proprietary laminate. Dofasco's wide range of steel products is sold to customers in the automotive, construction, energy, manufacturing, pipe and tube, appliance, packaging and steel distribution industries. The company has additional operations in Canada, the United States and Mexico. Dofasco also owns 98.7% of Québec Cartier Mining (QCM). QCM owns and operates the Mont-Wright open mine pit and a pellet plant at Port-Cartier.
Focusing on the key areas of Steel, Capital Goods and Services, the capabilities of ThyssenKrupp are organized in six segments - Steel, Stainless, Automotive, Technologies, Elevator and Services. With sales of 39.3 billion euros in 2003/2004 and 184,000 employees, the Group occupies mainly top-three positions with its activities worldwide.
ThyssenKrupp Steel concentrates on flat-rolled steel with high value added, tailored to customers' requirements. With sales of around 8.3 billion euros in fiscal year 2003/2004, almost 31,000 employees and customers in more than 80 countries, the segment is one of the world's foremost steel producers. In carbon steel flat products it is number 2 in Europe. Products from ThyssenKrupp Steel are used in a wide range of everyday applications, such as car bodies, facades and domestic appliances.
<u>About ThyssenKrupp in Canada</u>
ThyssenKrupp has a track record of successful operations in Canada. The Group has been operating in the country since 1914. Today ThyssenKrupp has a total of 25 companies with 4,270 employees in Alberta, British Columbia, New Brunswick, Newfoundland, Ontario and Quebec. Sales amounted to 1 billion euros in fiscal 2003/2004. The activities in Canada focus on the supply of body and chassis components to the North American auto industry, the production and service of elevators and escalators as well as the sale of stainless steel, rolled steel, nickel, tubular products and machine tools.
Forward Looking Statements
This press release contains "forward-looking statements" that are subject to a number of risks and uncertainties, many of which are beyond ThyssenKrupp and Dofasco's control, that could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. All statements other than statements of historical facts included in this press release are forward-looking statements. All forward-looking statements speak only as of the date of this press release. Neither ThyssenKrupp nor Dofasco undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. There can be no assurance that any transaction between ThyssenKrupp and Dofasco will occur, or will occur on the timetable contemplated hereby.
A media conference will be held at the Queen's Park South Room, Park Hyatt Hotel, Toronto on November 28, 2005, at 16:00 CET/ 10:00 EST.
English call-in number for listen-only mode: +1-416-641-6655.
An archive of the audio portion of the media conference will be available from 12:00 p.m., November 28, 2005 until 11:59 p.m., November 30, 2005. The archive can be accessed by dialing +1-416-626-4100 and entering the participant code 21271669.
An audio webcast will be available at www.dofasco.com.
ThyssenKrupp will be hosting a media conference at 15:00 CET (09:00 EST) in the Dreischeibenhaus, August-Thyssen-Strasse 1, D-40211 Düsseldorf. A video streaming is available in the press section at www.thyssenkrupp.com. For listen only please dial +49 (0) 695 8999 0509.
A conference call for financial analysts and investors will be held today at 17:00 CET (11:00 EST).
(1) related to the rounded average exchange rate of last ten trading days11/14 -25: 1C$ = 0,72EUR