Steel Products

Reliance Steel & Aluminum to Acquire Metals USA Holdings

Written by John Packard

Reliance Steel & Aluminum announced Wednesday morning a definitive merger agreement whereby Reliance will acquire all outstanding shares of Metals USA Holdings Corporation for approximately $1.2 billion. This will make Reliance the largest service center chain in North America with assets over $6.5 billion and annual sales in excess of $10.0 billion.

The transaction is subject to approval by Metals USA stockholders along with other regulatory clearances and customary closing conditions and includes a 30-day “go-shop” period.

David Hannah, Chairman and CEO of Reliance, will continue as the Chairman and CEO of the combined company. Lourenco Goncalves, Chairman, President and CEO of Metals USA will retire upon the closing of the transaction which is expected during the second quarter 2013. The rest of the Metals USA management team will remain intact and continue to operate the company.

The addition of the Metals USA service centers will add 48 locations to the Reliance existing distribution network and are strategically located throughout the United States. Reliance plans to operate the Metals USA plants under its current brand names.

The acquisition will take the percentage of Reliance flat rolled business up a few percentage points, according to comments made by David Hannah, CEO of Reliance during a conference call with analysts announcing the acquisition. The expectation is for Reliance business mix to be approximately 15 percent flat rolled when Metals USA business is added to the group.

Combined, Reliance will encompass approximately 6-7 percent of the total service center market based on remarks made by Mr. Hannah.

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