On August 12, 2024, Sims Limited (announced significant changes to its business structure, marking a pivotal moment in the company's strategy. The company has entered into a binding agreement to sell its UK Metal business to Unimetals Group Limited for total after-tax cash proceeds estimated at around £195 million. This transaction is part of Sims' broader strategic review initiated on November 22, 2023, and is expected to close before the end of the first quarter of FY25, pending regulatory approvals.
The UK Metal business includes 28 facilities, which encompass three port facilities and four shredders. The sale will also ensure that employees currently working with UKM will transition to Unimetals, maintaining job security amid the changes. In FY24, UKM accounted for about 14% of Sims Metal's total sales volumes, highlighting its significance within the company's operations. Following this divestment, Sims will concentrate on its metal portfolios in Australia, New Zealand, and North America, including its 50% stake in the SA Recycling Joint Venture.
Sims Limited was advised during this transaction by Macquarie Capital, KPMG LLP (UK), and Eversheds Sutherland, showcasing the company's commitment to strategic and professional guidance throughout the process. The decision to divest UKM comes as Sims aims to focus on high-potential markets, particularly in the United States, where demand for scrap metal is robust. CEO Stephen Mikkelsen emphasized that the sale provides an optimal outcome for both Sims and its shareholders, as it allows the company to leverage its strengths in more promising markets.
In addition to the sale of its UK Metal business, Sims has signed a letter of intent to sell its remaining 12.4% interest in CLP Circular Services Holdings LLC for approximately $32 million. This move is part of a series of divestments that began in January 2022, which has seen Sims sell its entire interest in Circular Services for a total of approximately A$126 million, resulting in an overall gain of A$56 million despite recognizing a loss of A$48 million in FY24 from the last tranche.
Sims Limited's commitment to strengthening its balance sheet is evident as the proceeds from these transactions are expected to total approximately A$435 million, to be received in the first half of FY25. The company plans to use these funds to enhance its financial position while balancing the need for business growth and shareholder returns. This strategic focus aligns with Sims' long-term vision of creating a sustainable, circular economy through innovative recycling solutions.
Founded in Australia in 1917, Sims Limited has established itself as a global leader in metal recycling and circular solutions. With over 4,600 employees and more than 160 facilities across 13 countries, the company is dedicated to increasing circularity and decarbonization efforts. Its mission to create a world without waste drives continuous innovation in the circular economy, further enhancing its role in sustainable practices.
