Legato Merger Corp. [NASDAQ: LEGO] disclosed that it has inked a merger agreement with Algoma Steel. In accordance with the merger agreement, Algoma Steel became a publicly listed firm. The common shares of Algoma Steel will be traded on the Nasdaq Stock Market. Algoma is also planning to submit an application to list its common shares on the Toronto Stock Exchange.
After the merger agreement, Algoma will further strive to work on its growth strategies under the leadership of current management of Algoma. Its Board of Directors will include six directors chosen by Algoma, three directors chosen by Legato, and sixth one is chosen by both the firms after the unanimous decision.
All-stock transaction suggests a pro forma enterprise value of more than $1.3 billion at closing and nearly $1.7 billion all-encompassing liable payment assuming no recoveries by Legato stockholders. Additionally, nearly $236 million owned in Legato’s trust account, various investors have dedicated themselves to contributing to the deal through a PIPE of $100 million at $10.00 per share.
The PIPE comprising considerable investments from strategic steel industry volunteers, as well as investments from Legato’s Chairman and other investors. As per the merger agreement, a unit of Algoma will be combined with and into Legato.
Moreover, Legato enduring the merger as a wholly-owned unit of Algoma. The merger deal offers that the current shareholders and management team of Algoma will, jointly, hold 75 million Algoma common shares on a fully diluted basis, with a suggested value of $750 million at $10 per share.
Legato’s Board of Directors has authorized the merger deal and suggested that Legato stockholders authorize and adopt the merger deal and the transaction. Algoma has got both shareholder authorization and Board of Director approval for the merger deal.