Nucor Announces Joint Venture with Mitsui
Mar / 06 / 2010 - Nucor Announces Joint Venture with Mitsui
Nucor and Mitsui agree to 50/50 venture NuMit - new venture will operate Steel Technologies
Nucor announced on Wednesday the creation of a new joint venture with Japanese trading company Mitsui. The new company will be called NuMit LLC and will own 100% of the North American steel service center group Steel Technologies.
Louisville based Steel Technologies has 23 service center and processing locations in Mexico, Canada and the United States. The company is involved in automotive, appliance and construction as their key markets.
Steel Technologies will be responsible for the previously announced Greenfield processing facility Nucor had announced for Monterrey, Mexico. The Monterrey facility is slated to have cut-to-length and slitting facilities and over time is expected to add pickling capabilities.
It is our understanding Steel Technologies will remain a “stand alone” operation with their existing management remaining in place.
Mitsui purchased Steel Technologies back in 2007 for $534 million and debt. The company had approximately $1.6 billion in sales in 2008. The company ranks as one of the top 20 service centers in the United States according to our sources.
Nucor has explained this joint venture will help get them closer to their customers - especially with the processing operation in Mexico.
Competing U.S. service centers are taking their time to react to the announcement. One large service center made the following comments to SMU regarding the proposed joint venture:
“In 2008, Steel Technologies had $1.6 billion of revenue and 24 locations. Now they have 23 locations and Nucor’s JV in Monterrey is back on the table. This is huge in scale. It allows Nucor to become more vertically integrated downstream, it gives them sizeable market share in the service center area, as well as into automotive. The Mexican operation is absolutely huge in scope and could be quite instrumental in securing transplant business.
This helps them to better understand customer demand, and likely helps secure more scrap.
It amazes me how Nucor has gone from mini mill to Big Steel with their Pig Iron facilities, to now embracing the European model with mills owning service centers.”
Nucor has been very vocal over the past few years about wanting to take their business both up-stream and down-stream from their core steelmaking operations. This joint venture gets them firmly entrenched in the North American service center markets and especially in the automotive and appliance arenas where they have not been as strong as they would like to be.
By bringing Steel Technologies to the table improves the Nucor position in the Mexican market and Mitsui could strengthen their potential export business.
Here is a copy of the original press release:
CHARLOTTE, N.C., March 2, 2010 /PRNewswire via COMTEX/ -- Nucor Corporation (NYSE: NUE) announced today that it has entered into an agreement with Mitsui & Co. (U.S.A.), Inc. ("Mitsui"), a wholly owned subsidiary of Mitsui & Co., Ltd., wherein each would indirectly own a 50% interest in a newly created company, NuMit LLC. NuMit will invest in various steel and steel related activities, both in North America and globally. Coinciding with the formation of NuMit will be its first investment, Steel Technologies LLC, which will own all of the assets, operations and business currently held by Mitsui in Steel Technologies, Inc. Closing of the transaction will occur after satisfactory resolution of regulatory approvals and other closing conditions.
Steel Technologies operates 23 sheet processing facilities throughout the U.S., Canada and Mexico. It will continue to operate as an independent unit with the existing management team maintaining responsibility for the performance of the business. This management structure will allow Nucor to continue its long-standing supply chain relationships with other sheet processing companies while at the same time allowing Steel Technologies the ability to independently manage its supply needs. Nucor's focus will remain on providing the most efficient supply chain solutions for all of its customers.
Nucor's previously announced plans to construct a greenfield flat rolled processing center in Monterrey, Mexico will be implemented by Steel Technologies LLC. The processing center is expected to include pickling, slitting and cut-to-length capabilities to serve customers in Mexico.
Dan DiMicco, Nucor's CEO and Chairman, noted, "We are very excited about forming the NuMit venture with Mitsui. For several years, Nucor has stressed the importance of finding the right partners to grow with internationally. Mitsui fits that criteria and will complement Nucor's other growth efforts. The excellence of both companies, Mitsui's global market experience and Nucor's operational and technological expertise will allow us to seize opportunities that may not otherwise exist."
Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and non ferrous scrap. Nucor is North America's largest recycler. (Source: Nucor Corporation press release)
