Reliance Steel to Buy Metals USA - Analyst Blog

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Reliance Steel & Aluminum Co. ( RS ) announced that it has entered into an agreement to acquire all outstanding shares of Metals USA Holdings Corp. ( MUSA ) 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 fee.

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. ( WOR ) and Gibraltar Industries Inc. ( ROCK ) with both carrying a Zacks Rank #2 (Buy).



METALS USA HLDG (MUSA): Free Stock Analysis Report

GIBRALTAR INDUS (ROCK): Free Stock Analysis Report

RELIANCE STEEL (RS): Free Stock Analysis Report

WORTHINGTON IND (WOR): 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: MUSA , ROCK , RS , WOR

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