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Six companies to watch on steel M&A front

Jan 11, 2019 | 04:47 PM | New York | Elizabeth Ramanand

Tags  steel, mergers and acquisitions, M&A, Commercial Metals Co, CMC, Gerdau, Steel Dynamics Inc, SDI Kentucky Electric Steel


Fastmarkets AMM reviews recent M&A deals for some heavy hitters in the steel industry. Each company's ongoing purchases - big and small - are intended to expand their global reach and develop products and services throughout 2019.

Fastmarkets AMM reviews recent merger-and-acquisition deals for some heavy hitters in the steel industry. Each company's ongoing purchases - big and small - are intended to expand their global reach as well as develop products and services throughout 2019.

Here are six companies to keep an eye on this year:

Commercial Metals Co (CMC)
CMC bought four US rebar mills and 33 rebar fabrication facilities from Gerdau for $600 million in November.

The assets acquisition from Gerdau adds approximately 2.5 million tons to CMC's melting capacity.

CMC recorded fiscal first-quarter net income of $19.7 million, down by 46.4% from $36.8 million in the same year-ago period, although net sales rose by 18.7% year on year to $1.28 billion from $1.08 billion.

The company is also expected to add about 800,000 tons of fabricated rebar shipments based on recent annual shipment volumes, president and chief executive officer Barbara R. Smith said during a conference call on Monday January 7 on CMC's earnings result for the three months ended November 30.

Steel Dynamics Inc (SDI)
SDI had two major acquisitions last year. First, the company bought Kentucky Electric Steel. The acquisition will add flat product and specialty alloy bar to the existing product line at Steel of West Virginia, a subsidiary of SDI.

The company also closed a $400-million purchase of Heartland Steel Processing LLC, which was the former US operation of Brazilian iron ore and steel producer Cia Siderurgica Nacional.

ArcelorMittal
ArcelorMittal USA recently agreed to take over management of iron ore operations at Hibbing Taconite. ArcelorMittal produced 62 million tons of iron in 2017, including from its Minorca Mine located 30 minutes northeast of the Hibbing facility.

ArcelorMittal also closed its acquisition of IIva and has assumed full management control of the Italian steelmaker, which will form a new business cluster within the ArcelorMittal Europe - Flat Products group called ArcelorMittal Italia.

Liberty House Group

A subsidiary of GFG Alliance, Liberty House intends to buy a total of seven European mills from ArcelorMittal.

In October, Liberty House sent a binding offer for the acquisition of ArcelorMittal's steel plant in Ostrava, Czech Republic; the Galati mill in Romania; the Skopje facility in Macedonia; and the hot-dipped galvanized production plant in Piombino, Italy.

In November, the company said it would purchase two ArcelorMittal mills in Belgium and one in Luxembourg.

Liberty House could become one of the largest wire rod producers in the United States, with a national reach due to recent acquisitions - the latest being its $320-million buy of Keystone Consolidated Industries Inc's (KCI) assets.

Assets for Dallas-based KCI include a wire rod facility with an electric-arc (EAF) furnace, a bar mill, three welded wire reinforcement mesh facilities and a pre-stressed concrete strand facility.

KCI will be combined with Liberty House’s operations in Georgetown, South Carolina, and could give Liberty an annual US EAF-based melting capacity of 1.8 million tons, along with 2 million tpy of wire rod rolling capacity, GFG said on its website.

Halfway through last year, Liberty House said it aimed to make more than “$5 billion in investments over the next few years” across the United stated and Canada. A month later in July 2018 it also reopened its wire rod mill in Georgetown, South Carolina.

The acquisition lends support to Liberty's plan to launch an initial public offering (IPO). A spokesperson for GFG Alliance said on January 3 that the IPO will take place this year, although there are no further details at this time.

Olympic Steel Inc
Service center Olympic Steel saw its third-quarter net income surge by fivefold to $11.6 million from $2.3 million in the same 2017 period on net sales that increased by 37.9% to nearly $457 million from $331.4 million.

Last year the company acquired specialty steel processor Berlin Metals in an all-cash deal, which supplies light-gauge cold-rolled sheet and strip as well as galvanized and other coated flat-rolled products to customers in the building products, automotive and industrial markets.

Olympic continues to eye niche acquisitions across its three main segments of carbon flat steel, specialty flat metals and pipe and tube. The company on January 2 concluded its acquisition of McCullough Industries in an all-cash deal.

Specific terms of these deals were not disclosed.

Norfolk Iron & Metal
Norfolk Iron started the year by acquiring O’Neal Flat Rolled Metals (OFR Metals), adding eight locations and enhancing the Nebraska-based company's product lines and capabilities for processing flat-rolled carbon, stainless and aluminium products.

OFR Metals is a processor and distributor of non-ferrous and carbon flat-rolled products, with its eight facilities have more than 650,000 square feet of processing and warehousing capabilities and its in-house processing solutions include leveling, slitting, blanking, shearing and polishing.

Under Norfolk Iron, OFR Metals has returned to its former name of Metalwest.


 

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