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Russel Metals to buy oilfield supply firm Apex Distribution

Keywords: Tags  Russel Metals, service center, acquisition, Apex Distribution. oilfield supply, Brian Hedges, Don White

CHICAGO — North American service center operator Russel Metals Inc. has agreed to purchase oilfield supplier Apex Distribution Inc. for Canadian $225 million ($226.2 million).

Russel Metals will acquire Edmonton, Alberta-based Apex and related companies and expects to close the deal next month. The total purchase price will include a C$175-million ($176-million) cash payment to shareholders and C$50 million ($50.3 million) to extinguish Apex Distribution’s net debt.

Russel Metals also agreed to pay an earnout over five years based on earnings before interest and taxes (Ebit) and return on net assets.

Apex, which serves western Canada’s energy sector, reported C$500 million in revenue for the fiscal year ended April 30, with Ebit of C$42 million.

Apex president and chief executive officer Don White will remain in place to operate the company as a stand-alone unit of Russel Metals.

"We believe the combination provides considerable upside potential for both companies," White said in a joint statement with Russel Metals president and chief executive officer Brian Hedges.

"Apex Distribution complements Russel’s existing energy tubular products segment and provides a new channel of distribution into the western Canadian oil and gas industry and the Saskatchewan potash market, along with immediate growth opportunities in the U.S. market through Apex Remington, a growing oilfield distribution operation," they said.

The acquisition marks Mississauga, Ontario-based Russel Metals’ third in 2012, having previously purchased Alberta Industrial Metals Ltd., a metals distribution and processing center in Red Deer, Alberta, and Siemens Laserworks Inc., which laser-processes metals at facilities in Saskatchewan and Alberta.

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