Reliance buys EMJ at higher price of $984M

Apr 03, 2006 | 12:28 PM | Frank Haflich

Reliance Steel & Aluminum Co.'s acquisition of Earle M. Jorgensen Co. was completed with a $50-million bump-up to EMJ shareholders over the original price estimate as the two West Coast-based companies combine to create the industry's second-largest distribution chain.

Los Angeles-based Reliance said it had acquired bar and tubing specialist EMJ in a transaction valued at about $984 million, including assumption of EMJ net debt along with payment of $6.50 in cash and 0.0892 of a share of Reliance common stock for each share of EMJ stock outstanding for a total per-share consideration of $14.21 per share.

This compares with a value of $13 for each EMJ share when the deal was originally announced in January, raising the total value of the transaction from its original estimated figure of about $934 million. The value of Reliance shares ultimately allotted to EMJ shareholders was subject to a collar divided by the average of the closing price of Reliance shares on the New York Stock Exchange for the 20 trading days ending on the second day prior to the deal's close. The price of both companies' common shares started to climb after the initial announcement and later continued to escalate after each firm reported exceptionally strong financial results for the last three months of 2005.....