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 Distributions 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
Canadas energy sector, reported C$500 million in revenue
for the fiscal year ended April 30, with Ebit of C$42
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
Russels 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