) has announced that it is going to acquire Skyline Steel, a
leading steel foundation distributor, and its subsidiaries from
) for roughly $605 million. Nucor has penned a Stock Purchase
Agreement for buying out the membership interests of Skyline Steel
from ArcelorMittal. Following the deal closure, Skyline Steel will
be Nucor's wholly owned subsidiary and will function out of its
existing headquarters in Parsippany, New Jersey.
Skyline Steel has been distributing Nucor's piling products for
over 20 years and has been a key customer of H-piling and hot
rolled sheet piling from Nucor-Yamato Steel. Through the
acquisition, Nucor aims to integrate Skyline into its system and
make it a more valuable downstream customer of coiled plate and
sheet products. In addition, Nucor expects that the technological
knowhow of both the companies will help them come up with
innovative solutions for the construction industry.
Skyline has an impressive distribution network, well
complemented by exceptional customer service and technical back-up.
The company has 21 sales offices and a strong infrastructure
comprising of a large number of stocking sites, a robust supply
chain and a number of processing and fabrication facilities.
Skyline's distribution network serves the U.S., Canada, Mexico
and the Caribbean, providing solutions for application in heavy
civil construction, marine construction, underground commercial
parking, storm protection, bridge and highway construction and
environment containment projects in the infrastructure and
construction industries. Thus, it appears that Nucor has made a
smart move towards inorganic growth since Skyline's excellent
network will enable it to expand its presence in North America.
Nucor should not face much of a problem financing the deal. The
company had cash and cash equivalents of $1.18 billion as on March
31, 2012, and also has a revolving credit facility of $1.5 billion
which will expire in December 2016.
Nucor said that Skyline has been valued in accordance with
present marketplace valuations of publicly traded steel
distributors. It expects the acquisition to be accretive in the
next fiscal year. Also, Skyline will continue to exclusively
distribute ArcelorMittal's piling and foundation products in North
America and the Caribbean. The transaction is subject to the
required regulatory approvals and will close once the approvals are
received and other closing conditions are satisfied.
Nucor Corp. faces stiff competition from
Commercial Metals Co.
United States Steel Corp.
). We currently have a long-term Neutral recommendation on the
company. The stock holds a short-term Zacks #4 Rank (Sell).
COMMERCIAL METL (CMC): Free Stock Analysis
ARCELOR MITTAL (MT): Free Stock Analysis Report
NUCOR CORP (NUE): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
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