GrafTech International Ltd. agreed to acquire C/G Electrodes LLC and the 81 percent of Seadrift Coke LP it didn’t already own for a combined $692 million to expand its access to raw materials. The shares rose the most in more than 18 months.
The purchases will be profitable in the first full year after closing and will produce about $26 million of operational savings, tax benefits and working-capital improvements, Parma, Ohio-based GrafTech said in a statement today.
GrafTech said the Seadrift acquisition will provide it with “a large portion” of needle coke used in making graphite electrodes, which melt steel scrap in electric-arc furnaces. The purchases will be funded with 24 million GrafTech shares, $233 million in cash and $200 million in non-interest bearing five-year senior subordinated notes, GrafTech said.
“Strategic repositioning via acquisition of remaining interest in Seadrift and acquisition of C/G Electrodes adds meaningful long-term value and differentiation” to GrafTech, Mark Parr, a Cleveland-based analyst at KeyBanc Capital Markets, said in a report today. He rates the shares “buy.”
GrafTech rose $3.79, or 28 percent, to $17.26 at 4:15 p.m. in New York Stock Exchange composite trading, the largest gain since Oct. 13, 2008.
Seadrift, based in the Texas city of the same name, has 141 employees and posted $74 million in sales last year. C/G, based in St. Marys, Pennsylvania, makes graphite electrodes and has 153 employees. The company had $76 million in sales last year.
GrafTech also today reported first-quarter profit excluding some items of 25 cents a share, topping the 20-cent average estimate of 10 analysts in a Bloomberg survey.