The scrap metals industry’s brave new world

Nov 01, 2007 | 10:04 AM |

A pair of billion-dollar-plus deals has changed the game for an industry that has resisted large-scale consolidation until now.

PHILADELPHIA — The mom-and-pop era of the scrap metals industry may be over if the two big transactions announced recently are any indication of a trend.

Steel Dynamics Inc. (SDI) stunned many with its Oct. 1 disclosure that it will acquire family owned scrap recycler Omni-Source Corp. in a deal valued at slightly more than $1 billion. Both companies are headquartered in Fort Wayne, Ind. Many in both the scrap and steel industries were still reeling from the announcement one week earlier that Chicago-based scrap processor Metal Management Inc. would combine with Sims Group Ltd., the big Australian recycler.

If completed, both billion-dollar-plus transactions will overshadow the usual scrap industry pattern of a smaller company whose owner might be close to retirement being bought a larger industry member. But it also could be the start of a new wave of buyouts and acquisitions in an industry that is seen as ripe for consolidation because many of its members are small, family owned companies.....

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