- Five Service Centers in U.S. South - Complementary to Russel's
Existing Footprint
- US$110 Million Purchase Price -
Attractive Return on Capital
- Financed from Existing Cash/Bank Facility
TORONTO, Nov. 4, 2021 /CNW/ - Russel Metals Inc. (TSX:
RUS) announces that it has entered into an agreement to acquire a
group of companies that operate as Boyd Metals ("Boyd") for
US$110 million, subject to closing
adjustments.
Boyd operates five service
centers in Fort Smith
(Arkansas), Little Rock (Arkansas), Joplin (Missouri), Oklahoma
City (Oklahoma) and
Tyler (Texas). Boyd's product mix is primarily comprised of
carbon steel products, but also includes stainless steel, aluminum
and other related industrial products. Boyd also offers value-added processing
services and has invested to expand such capabilities over the past
several years. For the twelve months ended September 30, 2021, Boyd generated revenues of US$244 million and Adjusted EBITDA1 of
US$39 million.
John Reid, President and CEO of
Russel commented, "Over the past 15 months, we have significantly
repositioned our business portfolio with the strategic objectives
of enhancing returns, increasing margins and reducing volatility.
As part of this strategy, we have: (i) repatriated approximately
$300 million of capital through the
monetization of our OCTG/line pipe businesses; (ii) invested in
value-added equipment in our existing service center operations;
and (iii) pursued acquisition opportunities that are complementary
with our existing platform, including the acquisition of Sanborn
Tube in late 2020. The acquisition of Boyd is a continuation of this repositioning.
We believe their culture, experienced management team and business
platforms are very much aligned with our existing business as we
look to further expand our U.S service center footprint. We
look forward to having all of the Boyd employees as part of the Russel
family."
The purchase price of US$110
million includes working capital, buildings and equipment,
real estate and other related assets.
The transaction will be financed from Russel's cash on hand
and/or drawings under its existing bank facility. At September 30, 2021, Russel had $337 million of cash and substantial availability
under its bank facility. The transaction is subject to
customary conditions and is expected to close in the fourth quarter
of 2021.
About Russel Metals Inc.
Russel Metals is one
of the largest metals distribution companies in North America, with a growing focus on value
added processing. It carries on business in three segments: metals
service centers, energy products and steel distributors. Its
network of metals service centers carries an extensive line of
metal products in a wide range of sizes, shapes and specifications,
including carbon hot rolled and cold finished steel, pipe and
tubular products, stainless steel, aluminum and other non-ferrous
specialty metals. Its energy products operations carry a
specialized product line focused on the needs of energy industry
customers. Its steel distributors operations act as master
distributors selling steel in large volumes to other steel service
centers and large equipment manufacturers mainly on an "as is"
basis.
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calling our Investor Relations Line: 905-816-5178.
Cautionary Statement on Forward-Looking
Information
Certain statements contained in this press
release constitute forward-looking statements or information within
the meaning of applicable securities laws relating to, among other
things, the anticipated benefits of the transaction, the timing and
anticipated satisfaction of conditions to close the transaction and
there can be no assurance that the proposed transaction will occur,
or that it will occur on the exact terms contemplated in this press
release. Forward-looking statements are often, but not
always, identified by the use of words such as "expect", "may",
"will", "could", "might", "should", "believe" and similar
expressions. Forward-looking statements are necessarily based
on estimates and assumptions that, while considered reasonable by
us, inherently involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements.
While we believe that the expectations reflected in our
forward-looking statements are reasonable, no assurance can be
given that these expectations will prove to be correct, and our
forward-looking statements included in this press release should
not be unduly relied upon. These statements speak only as of
the date of this press release and, except as required by law, we
do not assume any obligation to update our forward-looking
statements.
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1
Represents earnings before non-recurring items, interest, income
taxes, depreciation and amortization.
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SOURCE Russel Metals Inc.