Reliance Steel & Aluminum Co.
) announced that it has entered into an agreement to acquire all
outstanding shares of
Metals USA Holdings Corp.
) for $20.65 per share in cash, representing an enterprise value
of around $1.2 billion.
The boards of both the companies have unanimously approved the
acquisition. The deal is also subject to the approval of the
shareholders of Metals USA. The transaction is expected to be
accretive to Reliance Steel's earnings immediately upon closing,
scheduled in the second quarter of 2013.
Reliance Steel's shares jumped 8.6% following the announcement
of the acquisition.
Metals USA manufactures 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 existing operations. Metals USA is a strategic fit
with Reliance Steel's portfolio and complements its existing
customer base, product mix and geographic footprint.
Reliance Steel stated that Metals USA will continue to operate
under its current brand names. It plans to fund the deal and
refinance Metals USA's existing debt from a $1.5 billion credit
facility, along with funds from accessing the bank credit markets
and the debt capital markets.
The agreement includes a 30-day "go-shop" period that allows
Metals USA to seek alternative bids from third parties. If Metals
USA terminates its deal with Reliance Steel to accept a
third-party offer, the latter will get an undisclosed breakup
Reliance Steel is the largest metals service center company in
North America and it is expected that the company will have total
assets of over $6.5 billion and annual sales of over $10 billion
after the acquisition.
Reliance Steel currently retains a Zacks Rank #4 (Sell).
Other companies in the metals industry having a favorable
Zacks Rank are
Worthington Industries Inc.
Gibraltar Industries Inc.
) with both carrying a Zacks Rank #2 (Buy).
METALS USA HLDG (MUSA): Free Stock Analysis
GIBRALTAR INDUS (ROCK): Free Stock Analysis
RELIANCE STEEL (RS): Free Stock Analysis
WORTHINGTON IND (WOR): Free Stock Analysis
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