Russel Metals Inc, a leading North American metals distribution company, has announced a transformative agreement to acquire Tampa Bay Steel Corporation for $79.5 million, marking a significant expansion into the Florida market. The strategic acquisition, expected to close in December 2024, encompasses working capital, buildings, equipment, and real estate, positioning Russel Metals for substantial growth in the southeastern United States.
The acquisition represents a carefully planned strategic move that aligns with Russel Metals' expansion strategy. Tampa Bay Steel has established itself as a prominent player in the central Florida region, with an impressive track record of generating average annual revenues of $115 million and adjusted EBITDA of $13 million over the past five years. This performance history demonstrates the robust business foundation that attracted Russel Metals to the acquisition.
John Reid, President and CEO of Russel Metals, emphasized the strategic fit of the acquisition, highlighting Tampa Bay Steel's complementary product mix and geographic presence. The target company's recent US$20 million investment in value-added equipment and facility expansion over the past three years demonstrates its commitment to growth and modernization, making it an attractive addition to Russel Metals' portfolio. This investment has created a solid platform for future expansion within the Florida market.
The integration of Tampa Bay Steel into Russel Metals' operations will bring significant operational advantages. The acquisition will enhance Russel Metals' value-added processing capabilities and expand its non-ferrous product offerings. The deal structure allows Russel Metals to finance the purchase through existing cash reserves or available credit facilities, maintaining financial flexibility while executing this strategic growth initiative.
Tampa Bay Steel's experienced management team and established market presence represent valuable assets in this acquisition. The company's cultural alignment with Russel Metals' performance-based and decentralized operational approach suggests a smooth integration process. This cultural compatibility is particularly important as Russel Metals seeks to maintain operational excellence while expanding its market reach.
The transaction strengthens Russel Metals' position in the metals distribution industry, adding to its extensive network of metals service centers. The company's existing operations include a comprehensive range of metal products, serving diverse sectors through its three main segments: metals service centers, energy field stores, and steel distributors. This acquisition enhances the company's ability to serve customers with an expanded product line including carbon hot rolled and cold finished steel, pipe and tubular products, stainless steel, aluminum, and other non-ferrous specialty metals.
