MRC Global Closes Stream AS Buy - Analyst Blog


Houston, Texas-based MRC Global Inc. ( MRC ) recently completed the acquisition of Stream AS.  Like MRC Global, Stream is a distributor of pipe, valve and fittings (PVF), and also deals in flow control products, solutions and services, basically to the offshore oil and gas industry on the Norwegian Continental Shelf.

The company announced its plans to acquire Stream in early Dec 2013, at an agreed price of $260 million (Norwegian Kroner 1.60 billion), including the assumption of debt. Stream has employee strength of roughly 470 employees, with estimated revenues of around $273 million (Norwegian Kroner 1.68 billion) in 2013. The acquisition was funded through MRC Global's existing credit facilities.

On the same day, MRC Global announced the acquisition of Flangefitt Stainless Ltd. Flangefitt, headquartered in Warrington, England. Flangefitt is a distributor of pipe, flange and fitting to the oil and gas industry.

Flangefitt with estimated revenues of $28 million in 2013 will operate as MRC Flangefitt and is expected to be accretive to 2014 earnings.

With the acquisitions of these companies, MRC Global expects to generate $900 million in international revenues in the year 2014. Furthermore, management is optimistic about earning over $1.0 billion in international revenues in 2015.

The acquisitions are undertaken as a part of the company's strategy of growing internationally through acquisitions. In Jul 2013, MRC Global acquired Flow Control Products with the intention of expanding its business in one of the major oil-producing regions in the U.S., i.e., the Permian Basin. Acquisitions of Chaparral Supply, LLC and Production Specialty Services Inc. were completed in Jun 2012 and Dec 2012, respectively. The acquired businesses contributed roughly $43.0 million to revenues in the third quarter of 2013.

MRC Global currently carries a Zacks Rank #2 (Buy). Other stocks worth a watch in the industry include The Middleby Corporation ( MIDD ), Altra Industrial Motion Corp. ( AIMC ) and Precision Castparts Corp. ( PCP ). While Middleby carries a Zacks Rank #1 (Strong Buy), Altra Industrial Motion and Precision Castparts hold a Zacks Rank #2.

ALTRA HOLDINGS (AIMC): Free Stock Analysis Report

MIDDLEBY CORP (MIDD): Free Stock Analysis Report

MRC GLOBAL INC (MRC): Free Stock Analysis Report

PRECISION CASTP (PCP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AIMC , MIDD , MRC , PCP

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