Quanex Corp said on Monday its board has approved the spin-off of its building products business and the sale of its remaining auto parts business to a unit of Gerdau SA.
The announcement follows a strategic review, announced in May 2007, which explored whether separating Houston-based Quanex's Building Products and Vehicular Products businesses would deliver greater value to its shareholders.
Spin-off, merger
First, Quanex will spin-off its Building Products business to its shareholders as a stand-alone company called Quanex Building Products in a taxable distribution.
All Quanex shareholders would receive one share of Quanex Building Products stock in the spin-off for each share of Quanex stock before the acquisition by Gerdau.
Subsequently, to completion of the spin-off, Quanex will merge with a wholly-owned subsidiary of Gerdau S.A. in exchange for $39.20 per share in cash. At this price, Vehicular Products' total enterprise value will be approximately $1.673 billion.
Strategic decisions
We spent considerable time evaluating strategic alternatives and have determined this is the best course of action, as the businesses will benefit from greater strategic focus and capital flexibility, offer exciting opportunities for employees, and deliver compelling value for shareholders, “Raymond A. Jean, chairman and chief Executive officer of Quanex.
“…..our Vehicular Products and Building Products businesses have different capital costs, processes, products and end markets, and we have concluded that these businesses will be better positioned for success as separate companies," continued Jean.
Mr. Jean will become Chairman and Chief Executive Officer of Quanex Building Products and the current senior leadership team of Quanex will join him.
The transactions are expected to be completed by the end of the first quarter of calendar 2008.
November 19, 2007