Reliance Steel & Aluminum to use facility borrowings, stock to acquire Earle M. Jorgensen

By Jennifer Chiou

New York, Jan. 18 - Reliance Steel & Aluminum Co. said it will acquire Earle M. Jorgensen Co. (EMJ) for stock and cash, using part of its $600 million syndicated credit facility to help fund the purchase.

Reliance will acquire EMJ for $13.00 per share - a 25% premium to EMJ's closing stock price on Jan. 17 - in cash and stock for a total of about $934 million, including the assumption of $291 million in debt. The $384 million cash portion will be funded through the facility.

The consideration to EMJ stockholders will be paid 50% in Reliance stock and 50% in cash.

At closing, based on the 20-day average closing price for Reliance stock ended Jan. 12, Reliance would issue 5.2 million shares of its stock valued at about $327 million.

Both companies' boards unanimously approved the merger, which is subject to the approval of EMJ stockholders, customary regulatory and third-party approvals, and the registration of the shares of Reliance stock being issued as stock consideration on a Form S-4.

The company said there will be no changes to Reliance's senior management or board.

EMJ president and chief operating officer R. Neil McCaffery will replace chief executive officer Sandy Nelson, who will retire as of the closing date. Nelson will continue as a consultant to EMJ and Reliance during a post-closing transition period.

EMJ is a Lynwood, Calif., distributor of metal products. Los Angeles-based Reliance is a metals service center company.

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