BEST MERGERS AND ACQUISITIONS » NUCOR
Three rapid-fire acquisitions of prominent pipe and tube companies has propelled Nucor Corp. to the top tier of volume suppliers to that market segment in the United States and earned it AMMs 2017 Steel Excellence Award for Best Mergers and Acquisitions.
Late last year and in matter of weeks, Nucor either announced or closed on three separate acquisitions that have rocketed its market position in steel tube and pipe from zero at the beginning 2016 to nearly one million tons of pipe and tube production capacity in the non-energy segment of the market.
Charlotte, N.C.-based Nucor bought:
Independence Tube, a leading manufacturer of hollow structural section (HSS) steel tubing, which holds the second largest market share in HSS. Independence sells primarily through service centers from four locations in two states. This is a great acquisition for Nucor, giving us another growth platform and enhancing our position as the most comprehensive provider of steel solutions to the construction and infrastructure markets, John Ferriola, president and chief executive officer, commented on the transaction at the time it closed. Purchase price was $435 million.
Southland Tube, also a HSS manufacturer, which counts one facility in Alabama and ranks third in its share of the domestic HSS steel tubing market. The acquisition of Southland Tube is an excellent fit for our Nucor family and strategy for profitable growth ... and complements our recent acquisition of Independence Tube, Ferriola commented on the addition. Purchase price was $130 million.
Republic Conduit, a leading manufacturer of steel electrical conduit in North America. The purchase ... gives us a new line of value-added products to offer our customers, Ferriola said. This acquisition hits on all five of the drivers in our companys long-term strategy for profitable growth.
Republic Conduit counts two U.S. operations and was acquired from Luxembourg-based Tenaris S.A. for a purchase price of $335 million.
All three acquisitions were executed in step with Nucors five-point criteria for growth, which includes strengthening the companys position as a low-cost producer and providing a clear path to achieve market leadership, move up the value chain, expand downstream channels to market, and achieve commercial excellence.
We have been using our strong balance sheet to grow our company, Ferriola said. Our acquisition of three tubular companies late last year gives us a new growth platform and a whole new segment of value-added products we can offer our customers.
We went from not being a player in the tube market to being among the market leaders for hollow structural section steel tubing and steel electrical conduit with these acquisitions. Already, weve been encouraged by the strong financial performance of our new Tubular Products Group in 2017, as well as the synergies were achieving with our sheet mills, he said.
Together, the three acquisitions provide a ready-made outlet for the product coming off the companys sheet mills. In 2006, eight percent of Nucors total sheet mill shipments went to its downstream businesses. With the addition of Independence, Southland and Republic Conduit, that number is expected to jump to about 20 percent.
Adding HSS steel tubing and steel electrical conduit production capability also positions the company to provide a wider selection of products to its fabricator and service center customers. Nucor now ranks second in market share for HSS steel tubing and is among the market leaders for steel electrical conduit. It currently counts nearly one million tons of pipe and tube production capacity.
And the benefits dont stop there. Nucor is currently installing a large diameter tube mill at its existing Iuka, Miss., facility. The addition of large-size HSS to Independence Tube and Southland Tubes comprehensive product lines will create the widest product offering in North America for HSS solutions. These HSS solutions for the construction and infrastructure markets build on Nucors leadership positions in plate, bar and structural steels as well as joist, decking, metal buildings and rebar fabrication that also serve those markets.
In addition to weighing and capturing the synergies between Nucors existing facilities and the three recent acquisitions, the company also considered cultural fit. Nucor and the three new members of its expanding family all share a commitment to operating their businesses safely.
Like its parent, all three are nonunion. Each company employs some form of incentive compensation and embraces the same entrepreneurial mindset. And they all emphasize operational excellence and driving efficiency in the production process.