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ASX ANNOUNCEMENT
MEDIA RELEASE
26 June 2006
ONESTEEL AND SMORGON STEEL TO CREATE THE PRE-EMINENT STEEL AND
METALS COMPANY IN AUSTRALIA
Executive summary
• OneSteel Limited (“OneSteel”) and Smorgon Steel Group Limited (“Smorgon Steel”)
have reached an agreement under which OneSteel will acquire all of the shares in
Smorgon Steel (the “Proposed Transaction”).
• It is intended that the Proposed Transaction be undertaken via a scheme of
arrangement, which is expected to be completed by late October 2006, subject to the
Australian Competition and Consumer Commission (“ACCC”) process.
• Smorgon Steel shareholders will receive a combination of OneSteel ordinary shares
and cash with an implied value of $1.761 per Smorgon Steel share.
• Smorgon Steel shareholders will receive 9 shares in OneSteel for every 22 shares
they hold in Smorgon Steel. In addition, Smorgon Steel shareholders will receive
between 6.2 and 22.6 cents per share.
• Smorgon Steel shareholders will continue to be entitled to the final dividend that will be
declared by Smorgon Steel for the 2006 financial year, which will be 5.0 cents per
share, fully franked.
• The implied offer price represents a premium of 31.8% to Smorgon Steel’s one month
VWAP2 (or a premium of 35.6% when Smorgon Steel’s final dividend of 5.0 cents per
share is included) and values Smorgon Steel’s equity at approximately $1.6 billion.
• The combination of the businesses is expected to generate net EBITDA synergies of
$70 million per annum by the end of the third full year following completion.
• Proposed Transaction expected to be EPS accretive (pre non-recurring items and
amortisation) for both OneSteel and Smorgon Steel shareholders in its first full year of
operations.
• When completed, the Proposed Transaction will produce a major, more efficient and
competitive Australian steel company with pro-forma annual revenue in excess of $5.5
billion3,4, EBITDA of approximately $700 million3,4, over 10,000 employees, more than
200 sites around Australia and operations in more than 10 countries outside Australia.
• In the absence of a superior offer, the Proposed Transaction is unanimously
recommended by the Directors of Smorgon Steel, each of whom intends to vote all
shares they personally hold in favour of the transaction.
• The Proposed Transaction is subject to a number of conditions, including clearance
from the ACCC.