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Silicon-metal producers Globe Specialty Metals Inc (GSM.O) and Spain's Grupo FerroAtlántica SA will merge to form a company controlled by FerroAtlántica shareholders, betting on growing demand from carmakers to solar energy companies.
The combined company, with an enterprise value of $3.1 billion, will build on FerroAtlantico's presence in Europe and Globe Specialty's footprint in North America.
Shares of Globe Specialty, which has a market value of $1.13 billion, jumped as much as 12 percent to $17.18 on the Nasdaq.
Silicon is a key element used to make everything from lipstick and semiconductors to aluminum cars and solar cells.
"While the valuation is not terribly attractive to us, we view the consolidation of global silicon metal capacity as a positive for the industry," KeyBanc Capital Markets analysts said in a note.
The deal would value the combined company at 9.5 times enterprise value to earnings before interest, tax, depreciation and amortization (EBITDA), which is toward the higher end of Globe's historical trading range, they said.
FerroAtlántica, owned by Spanish billionaire Juan Miguel Villar Mir's industrial conglomerate Grupo Villar Mir, will own 57 percent of the new company. Globe shareholders will own the rest.
The combined company, with a workforce of about 4,700, will operate 26 factories and nine mines in nine countries. It will be headquartered in London and listed on the Nasdaq.
Globe's chief executive, Jeff Bradley, and FerroAtlántica CEO Pedro Paguaga, will be co-CEOs of the new company.
The deal is expected to close in the fourth quarter and will add to earnings on a per share basis in the first year after closing.
Goldman Sachs & Co and Nomura Securities International Inc were Globe Specialty's financial advisers, while Latham & Watkins LLP was its legal counsel.
Societe Generale advised Grupo FerroAtlántica. Cravath, Swaine & Moore LLP and Uria Menendez were its legal counsel.
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- [Editor:tianxiao]
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