Reliance Steel & Aluminum Co. ( RS ) said that it has
amended and restated its existing $1.5 billion unsecured revolving
credit facility and raised new term loan worth $500 million.METALS USA HLDG (MUSA): Free Stock Analysis
ReportGIBRALTAR INDUS (ROCK): Free Stock Analysis
ReportRELIANCE STEEL (RS): Free Stock Analysis ReportWORTHINGTON IND (WOR): Free Stock Analysis
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The credit agreement, which has a five-year term (expiring Apr 4,
2018), provides Reliance Steel with an option to increase the
revolving credit facility by up to $500 million. Both facilities
The twin transactions represent a significant step in obtaining
the necessary funding to complete Reliance Steel's earlier
announced buyout of Metals USA Holdings Corp. ( MUSA ).
Reliance Steel, in Feb 2013, entered into an agreement to acquire
all outstanding shares of Metals USA for $20.65 per share in cash.
Reliance Steel expects to close the acquisition in second-quarter
Metals USA makes steel and aluminum components and had assets
worth $1 billion and sales of $2 billion at the end of 2012. With
the acquisition, Reliance Steel will add about 48 service centers,
which are strategically located throughout the U.S., to its
Metals USA is a strategic fit with Reliance Steel's portfolio and
complements its existing customer base, product mix and geographic
footprint. The transaction is expected to be accretive to Reliance
Steel's earnings immediately upon closing.
Reliance Steel has tremendous earnings capacity with its broad and
diversified product base, along with a wide geographic footprint
that positions it well in the industry. The company continues to
evaluate and execute additional growth projects and is well placed
to leverage the strong momentum across a number of end
However, Reliance Steel contends with weak steel and metals
pricing environment. We also remain concerned about the
non-residential construction market (the company's largest end
market), which continues to be the weakest link.
Reliance Steel currently carries a short-term (1 to 3 months)
Zacks Rank #3 (Hold).
Other companies in the metals industry having favorable Zacks Rank
are Gibraltar Industries Inc. ( ROCK ) and
Worthington Industries Inc. ( WOR ). While Gibraltar
holds a Zacks Rank #1 (Strong Buy), Worthington retains a Zacks
Rank #2 (Buy).