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Canadian steel producer Algoma Steel’s stocks are all set to debut on the New York-based NASDAQ exchange, following its merger with the US-based blank-check company Legato Merger Corp (LEGO:US, NASDAQ:LEGO).
Algoma announced on Monday, May 24, that it has signed a US$ 1.3-billion deal with the special purpose acquisition company (SPAC). The steel firm also aims to file for the initial public offering (IPO) of its common shares on the Toronto Stock Exchange (TSX).
The above transaction is likely to provide Algoma with US$ 306 million in cash, including a private placement worth US$ 100 million with major investors.
Legato's Chief Executive Officer David Sgro stated that at the current valuation, the company expects 1.9x adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the current calendar year.
What to expect from Algoma Steel SPAC Merger?
Steel prices recently touch a 12-year high, which could offer remarkable returns to Legato’s shareholders. The basic material company has a production turnover of nearly 2.8 million tonnes of steel annually, which makes it the second-largest steelmaker in Canada. It has a workforce of around 2,700 people. As per its investors’ report, the firm is anticipating US$ 44 million of cost savings yearly.
Algoma Steel is also planning to transform one of its coal-driven furnaces to an electric arc that will cut its carbon footprints by over three million tonnes per annum.
The company was founded in 1902 and was earlier acquired India-based Essar Group.
Let us check out the SPAC’s stock performance on the back of this deal.
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Legato Merger Corp (LEGO:US, NASDAQ:LEGO)
Stocks of the black check company climbed as much as 2.50 per cent to US$ 9.95 apiece on Tuesday, May 25. This surge has propelled by the breakthrough deal with the Canadian steel producer. It also ached its all-time high of US$ 10.025 apiece.
The SPAC company has a current market cap of US$ 301 million. Its five million shares changed hands in just two hours of trading on Tuesday, a staggering surge against its 30-day average volume of 57,000 shares.
