The Deal: Sumitomo's Bid for Edgen Group Looks to be The Last

NEW YORK (The Deal) -- Pipe manufacturer Edgen Group  (EDG) Tuesday filed the preliminary written consent notice for its $1.2 billion merger with Sumitomo Corp. of America Inc., a subsidiary of Japanese manufacturer Sumitomo Corp. 

Sumitomo is acquiring Edgen for $12 per share, or roughly $520 million for the class A and B common shares, in a merger that was executed with written consent of partnerships controlled by Jefferies Capital Partners Inc. that collectively own 56.2% of Edgen. Jefferies cashes out its stake with the deal. 

With debt, the deal is valued at about $1.2 billion. 

Edgen shares traded up from $7.60 on the Oct. 1 merger announcement to $11.90 and have since drifted up on a par with the deal value. On Wednesday, the stock opened at $12.04. 

The written consent notice filed with the Securities and Exchange Commission does not call for a proxy as the deal when signed already had a majority approval so it won't go to a shareholder vote. Written consent notice is required by the SEC to make certain that minority shareholders are informed about the transaction. 

The filing states that Edgen's financial advisors Citigroup Global Markets Inc. since July contacted nine strategic and three financial parties about their interest in Edgen. The results do not suggest another offer is coming. Four potential bidders signed confidentiality agreements during August and were asked to offer preliminary bids between Aug. 30 and Sept. 5. Two of the parties dropped out prior to those deadlines and the remaining two indicated in mid-September they would not continue to pursue Edgen. 

The companies anticipate closing the deal by the end of the year subject to regulatory approvals. The filings for U.S. antitrust approval were filed with the Department of Justice and Federal Trade Commission on Oct. 15 and the initial waiting period expires Nov. 14. Under the merger agreement, Sumitomo agrees to use best efforts to divest or hold separate assets as long as any such action would not be material to the oil related tubular goods businesses of the combined companies. 

In its 10K filing, Baton Rouge, La.-based Edgen states that it does not believe that its competitors offer the breadth and depth of specialty steel products in stock that the company offers and that no one competitor or small group of competitors is dominant in any of its markets. 

Written by Scott Stuart

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