Russel to acquire service centres for $118.6M (U.S.)

Executive Summary

• Russel Metals Inc. has entered into an agreement to acquire seven metal service center locations from Kloeckner Metals Corp. for approximately $118.6 million (U.S.), subject to working capital and other normal course adjustments.
• The acquisition includes real estate, buildings, equipment, working capital, and operating personnel for locations in Iowa, North Carolina, Georgia, Texas, and Florida.
• The transaction is expected to close in the fourth quarter of 2025 or first quarter of 2026 and will be financed using cash on hand or drawings under the company's existing credit facility.

Key Details

• Transaction Value: Approximately $118.6 million (U.S.), subject to closing working capital and other normal course adjustments.
• Purchase Price Breakdown: Based on net book value of working capital (~$67.1 million at June 30, 2025) plus $51.5 million for property, plant, and equipment.
• Acquired Assets: Seven service center locations including working capital, real estate, buildings, equipment, and operating personnel.
• Locations Acquired:
  • Dubuque, Iowa
  • Charlotte, North Carolina
  • Suwanee, Georgia
  • Houston, Texas
  • Austin, Texas
  • Jacksonville, Florida
  • Pompano Beach, Florida
• Historical Financials of Targets (Jan 1, 2023 – June 30, 2025):
  • Average Annual Revenues: ~$500 million (U.S.)
  • Average Annual Adjusted EBITDA: ~$20 million (U.S.)
• Financing: To be financed from cash on hand or drawings under existing credit facility (totaling $566 million on June 30, 2025).
• Closing Conditions: Subject to customary closing conditions.
• Expected Closing: Fourth quarter 2025 or first quarter 2026.
• Strategic Impact:
  • Revenue base in the U.S. will exceed 50% (up from 30% in 2019 and 39% in 2024).
  • Approximately 350 Kloeckner employees will join Russel.
  • Expected operating benefits through enhanced inventory management, procurement, and facility modernizations/value-added equipment reinvestments over a two- to three-year period.

Notable Quotes

• John Reid, President and CEO: "The acquisition of these seven locations is a complementary fit with our existing U.S. locations as they will tie into our footprint in key regions of Florida/Georgia, Texas, the Carolinas and Iowa/Wisconsin. In addition, this transaction is a continuation of our long-term growth strategy in the U.S."
• John Reid, President and CEO: "We believe this acquisition will provide operating benefits through enhanced inventory management, procurement, and reinvestments in facility modernizations and value-added equipment. These initiatives are expected to be implemented over a two- to three-year period."