Winner Steel, Inc.
A global partnership forged in strategic opportunity and value.
About Winner Steel
Winner Steel, Inc. was the largest privately-held producer of hot-dipped galvanized (HDG) steel sheet and galvanneal in the U.S., and the fourth largest producer of HDG steels and galvanneal overall. With three of North America’s most modern, flexible and efficient HDG production lines under roof, Winner was capable of producing over 1.2 million tons of construction/HVAC grade and exotic, high-strength and exposed and unexposed automotive quality HDG steels and galvanneal annually. Winner’s experienced, non-union workforce was also a rare asset in the steel industry.
Key Atmospherics at the Time of the Transaction
The highly capital intensive steel industry was requiring tremendous additional new investment to upgrade operations, add capacity following years of neglect and respond to new federal, state and local environmental regulations. New plants tended to be smaller, close to specific customers and focused on producing specific products or providing specific services. Increases in domestic steel production combined with increasing volume of imports was leading to an excess of supply, putting significant and accelerating downward pressure on prices and margins. Against this backdrop, Winner was operating unprofitably at less than 50% of capacity, its plant was situated on an Environmental Protection Agency Superfund site in a remote, geographically undesirable part of the U.S, the Company was notified that its line of credit with its bank group would not be extended and its workforce had voted to unionize.
The Etkin & Company Strategy
Etkin & Company’s strategy included positioning Winner as a unique steel industry acquisition opportunity with modern operating assets that had decades of useful life and would immediately provide an international steel producer with a toehold or an expanded presence in the very lucrative North American steel marketplace. Etkin & Company’s presentation also included a detailed qualitative and quantitative conclusively demonstrating the outsized returns that a well-capitalized strategic acquirer of Winner’s business and assets could garner across all economic cycles. Etkin & Company’s presentation generated interest in Winner Steel from almost every steel producer of size in the world.
The $300+ million transaction that Etkin & Company developed and concluded for the shareholders of Winner Steel with a joint venture between Novolipetsk Steel (London Stock Exchange: NLMK-LN), a Russia-based global steel producer, and Duferco Group, a Swiss-based global steel production, processing and trading operation, created a fully vertically integrated global steel operation poised to take an increasing share of the North American market for HDG steel sheet and galvanneal.