Roanoke Electric Steel is under new ownership

Virginia Business
June 2006

Indiana-based Steel Dynamics Inc. was looking for an opportunity to diversify its product base. It found what it was looking for in Roanoke Electric Steel Corp.

Steel Dynamics acquired the Roanoke-based company for $111 million in cash and the assumption of $45 million in debt. Roanoke Electric Steel is now the Merchant Bar Products Division of Steel Dynamics.

People in Roanoke were a bit surprised by the event, says Beth Doughty, president of the Roanoke Regional Chamber of Commerce. But, she adds, the company’s decision to sell made plenty of sense. “They’ll be able to get the investment and resources they needed to grow and expand with this deal,” she says,

The acquisition is not expected to cause layoffs. The combined companies will operate five electric-furnace mills with annual production capacity of about 5 million tons. Steel Dynamics now provides a range of steel products, including merchant and engineered bar (Roanoke’s specialty), flat-rolled, light structural steel and wide-flange beams and rails, as well as steel joists and decking used in nonresidential construction.

Fred Warner, investment relations manager for Steel Dynamics, says that his company will invest up to $40 million to upgrade former Roanoke Electric Steel facilities. He notes that Roanoke Electric Steel was producing 1 million tons of steel a year with 1,600 employees, while Steel Dynamics produces 3.6 million tons of steel with 1,800 employees at its Indiana plant.

“Roanoke had actually set internal sales records in the last few quarters, but we think there is plenty of potential for improvement,” he says.

“Through time, we’ll make some modifications in managing the company and in production that we expect will allow us to grow the volume of shipments and increase the profit margins.”