LOS ANGELES Reliance Steel & Aluminum Co. is buying metals USA Holdings Corp. for about $766.1 million.
Reliance, which processes metals and distributes about 100,000 metal products, said Wednesday that it will pay $20.65 per metals USA share. Thats a 13 per cent premium to Tuesdays closing price of $18.30.
The companies put the deals total enterprise value at around $1.2 billion.
It has about 37.1 million shares outstanding, according to FactSet, and its stock jumped $2.31, or 12.6 per cent, to $20.61 in morning trading. Reliance rose $4.86, or 7.5 per cent, to $69.55.
metals USA had approximately $2 billion in sales for the year ended Dec. 31. Reliance is expected to have annual sales of more than $10 billion once the buyout is complete.
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 to accept a third-party offer, Reliance will get an undisclosed breakup fee.
Reliance, based in Los Angeles, said metals USA will continue to operate under its current brand names. It plans to fund the deal and refinance metals USAs existing debt from a $1.5 billion credit facility, along with funds from accessing the bank credit markets and the debt capital markets.
Reliance Chairman and CEO David Hannah will remain in those posts for the combined company. Hannah said in a statement that the acquisition is Reliances largest to date and will add 48 service centres in the U.S. to its existing operations.
Reliance has a network of more than 220 locations in the U.S. and Australia, Belgium, Canada, China, Malaysia, Mexico, Singapore, South Korea, the United Arab Emirates and the U.K.
metals USA is an excellent fit and nicely complements Reliances existing customer base, product mix and geographic footprint, he added.
The transaction is expected to immediately add to Reliances earnings once it closes. Both companies boards unanimously approved the acquisition. It still needs the approval of metals USA shareholders.
metals USA Chairman, President and CEO Lourenco Goncalves will retire once the buyout is complete, which is expected in the second quarter.
