Quanex Shares Surge on Spin-Off and Sale of Units

Quanex announced Monday it will split itself into two pieces, spinning-off its building products unit, and then selling its automotive supply business to Brazilian company Gerdau SA. Shareholders will receive one share of the standalone Quanex Building Products company for each share of Quanex. Once that transaction is complete, Quanex will sell its vehicular parts unit for $39.20/share to Gerdau, a Brazilian steelmaker. At that price, the auto parts division will have a total enterprise value of about $1.67 billion. The new Quanex Building Products will be almost totally debt free and is expected to have solid cash flows, the company said. CEO Raymond A. Jean, who will remain CEO of the spun-off company, said, "Our Vehicular Products and Building Products businesses have different capital costs, processes, products and end markets, and we have concluded that these businesses will be better positioned for success as separate companies." Quanex jumped in pre-market trading, gaining 36.1% to $50.

Sources: MarketWatch, AP
Commentary: Six Ways to Invest in Aluminum: The Most Abundant Metal in the World • A Comparative Analysis of Two Steel Producers: Gerdau SA and Nucor
Stocks to watch: NX, GGB

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