Quanex to Spin Off Building Products

Prior to the acquisition of the MACSTEEL business of Quanex Corporation, the latter will spin off building products as a stand-alone company called Quanex Building Products. Gerdau will then acquire all of the outstanding shares of common stock of Quanex at $39.20 a share. The Quanex board has unanimously approved the transaction and is expected to recommend shareholders vote in favor. The transaction should be completed by end Q1 2008. MACSTEEL produces special bar quality (SBQ) steel and around 80% of its production is for the automotive industry. Its business will be coordinated by Gerdau from Brazil, where the latter already has long specialty steel plants in the Gerdau Aços Especiais Piratini mill (Brazil) and Sidenor (Spain and Brazil). Citi was exclusive financial advisor to Gerdau and Simpson Thatcher & Bartlett acted as legal advisor.