TORonTO — Russel metals Inc. has an early-stage agreement to buy Apex Distribution Inc., a Calgary-based oilfield services company, for an undisclosed price.
The Toronto-based metals distribution company has a letter of intent with the privately-held company to negotiate exclusively with Russel until Oct. 31.
The purchase price was not given, but Russel said it will consist of cash at closing and an earn-out based on future earnings.
Apex Distributions annual revenues for fiscal 2012 were about $500 million and its earnings before interest and taxes were approximately $42 million. It employs approximately 473 people, with 374 in Canada. It operates 58 branches – 44 in Canada and 14 in the US.
This is the most exciting opportunity we have seen for our shareholders since our acquisitions of JMS Russel metals in 2007 and Leroux Steel in 2003, said Brian Hedges, president and CEO of Russel metals.
The addition of Apex Distribution would complement our existing energy tubular products segment and would provide a new channel of distribution into the Western Canadian oil and gas industry along with immediate growth opportunities in the US market through Apex Remington, a start-up operation in the US.
Russel said the purchase would be funded from its current cash position, using funds from its most recent financing, which raised $300 million.
It believes the acquisition would immediately add to earnings.
In May, Russel announced an agreement to acquire Alberta Industrial metals Ltd., a metals distribution and processing service centre in Red Deer, Alta., for $30 million.
Russel sells steel and pipe to the construction and oil and gas industries as well as many other customers.
© 2012 The Canadian Press
