Russel Metals' Expansion Endeavor: Samuel, Son & Co

Samuel, Son & Co
Samuel, Son & CoImage Source: Samuel, Son & Co

Synopsis:

Russel Metals unveils its acquisition agreement with Samuel, Son & Co., Limited, encompassing seven service centers for approximately $225 million. The deal includes centers in various locations across Canada and the United States. Russel aims to integrate these centers, envisioning operational enhancements and geographic synergies. The acquisition, expected to finalize by 2024, amplifies Russel's presence in Western Canada and extends its reach into the US Northeast.

Article:

Russel Metals Inc. has recently announced an acquisition agreement with Samuel, Son & Co., Limited, marking a significant move in expanding its business footprint. The agreement entails Russel acquiring seven service center locations from Samuel for approximately $225 million. These service centers span diverse geographical regions, including Winnipeg, Calgary, Nisku, Langley, Surrey, Buffalo, and Pittsburgh, while Samuel will retain its Delta location, undergoing a phased shutdown.

The acquisition's financial structure is based on the net book value of working capital, estimated at around $186 million as of September 30, 2023. Additional value includes equipment and machinery worth $29 million, with an extra $10 million. The seven centers, part of the transaction, yielded revenues of $704 million and adjusted EBITDA of $33 million in 2022, with $457 million in revenues and $19 million in adjusted EBITDA for the nine months ending September 30, 2023.

Russel Metals' President and CEO, John Reid, expressed enthusiasm for the transaction, citing the synergies in geography and product mix between the two companies. Reid anticipates seamless integration with approximately 340 Samuel employees joining Russel, foreseeing strategic advantages in Western Canada and the US Northeast markets.

The acquisition aligns with Russel's strategy to optimize operations, targeting enhanced inventory management, procurement, and systems. These reorganization initiatives aim to be implemented over a two-year period, promising operational efficiencies and a bolstered market presence.

Financing for the transaction will be facilitated from Russel's cash reserves, amounting to $569 million as of September 30, 2023. The deal awaits Canadian regulatory approvals and customary closing conditions, expected to conclude by the first or second quarter of 2024. This strategic move signifies Russel Metals' commitment to expansion and strengthening its market presence in key regions.

Conclusion:

Russel Metals' acquisition of seven service centers from Samuel represents a strategic maneuver aimed at broadening its geographical reach and enhancing operational efficiencies. The synergies between the companies promise a strong foothold in Western Canada and an extended presence in the US Northeast. With meticulous planning for integration and efficiency enhancements, Russel sets the stage for a transformative business expansion, leveraging its cash reserves for a promising future.

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