Algoma Steel and Legato Merger Corp. sign merger agreement
At $10.00 per share of Legato common stock, this all-stock transaction values the combined company at an enterprise value of approximately $1.7 billion.
Sales & Marketing
Mining & Resources
NEW YORK and SAULT STE MARIE — On May 24, the Canadian parent company of privately held Algoma Steel Inc., an independent steel producer with steelmaking and finishing operations in Sault Ste. Marie, Ontario, and Legato Merger Corp., a special purpose acquisition company, jointly announced that they have entered into a definitive merger agreement that will result in Algoma becoming a publicly listed company with its common shares traded on the Nasdaq Stock Market. Algoma also intends to apply to list its common shares on the Toronto Stock Exchange.
As a publicly traded company, Algoma will continue to execute its growth strategies under the leadership of Algoma’s current management, with a Board of Directors that will include six directors designated by Algoma, three directors designated by Legato and one jointly nominated.
Michael McQuade, CEO of Algoma, commented, “The proposed transaction will provide Algoma with investment capital and an enhanced capital structure to support further transformative investments that are expected to drive improved financial performance and sustainable returns through the steel pricing cycle”.
McQuade added, “We continue to evaluate our strategic options, including the potential for a substantial investment in electric arc steelmaking”.
“We believe that Algoma’s transformation and potential investments will allow Legato stockholders to participate in a significant value creation opportunity. We are excited to partner with Algoma’s management team which has an impressive track record of implementing cost savings and operational upgrades over the last few years,” said Eric Rosenfeld, Legato’s Chief SPAC Officer. “At an implied valuation multiple of 1.9 times calendar year 2021 expected Adjusted EBITDA, we believe that the combined company represents a substantial valuation discount to Algoma’s peer group and a great value for Legato’s stockholders,” said David Sgro, Legato’s Chief Executive Officer.