Russel Metals to Acquire Alberta-Based Apex Distribution
08/30/2012 - Russel Metals Inc. has entered into an agreement with Apex Distribution Inc. pursuant to which Apex has agreed to deal exclusively with Russel Metals until 31 October 2012 and the parties have agreed to negotiate in good faith to enter into a definitive agreement for the acquisition by Russel Metals of Apex Distribution and related companies.
Russel Metals Inc. announced it has entered into a Letter of Intent with Apex Distribution Inc. pursuant to which Apex Distribution has agreed to deal exclusively with Russel Metals until 31 October 2012 and the parties have agreed to negotiate in good faith to enter into a definitive agreement for the acquisition by Russel Metals of Apex Distribution and related companies. The purchase price will consist of cash at closing and an earn out based on future earnings.
Apex Distribution is a leading Canadian oilfield supply company servicing the energy segment in Western Canada. Apex Distribution’s annual revenues for fiscal 2012 were approximately $500 million and its earnings before interest and taxes were approximately $42 million.
Apex Distribution employs approximately 473 people of whom 374 are in Canada. It operates 58 branches, 44 in Canada and 14 in the U.S.
Brian Hedges, President and CEO of Russel Metals stated, “Apex Distribution is the largest Canadian owned oilfield supply company in Western Canada. The addition of Apex Distribution would complement our existing energy tubular products segment and would provide a new channel of distribution into the Western Canadian oil and gas industry along with immediate growth opportunities in the U.S. market through Apex Remington, a start-up operation in the U.S. We view this as one of the fastest growing segments of the oil and gas industry and the addition of Apex Distribution would complement our existing Alberta based energy operations Comco Pipe and Supply, Fedmet Tubulars and Triumph Tubular & Supply and our U.S. basedcompanies Pioneer Pipe and Spartan Energy Tubulars. This is the most exciting opportunity we have seen for our shareholders since our acquisitions of JMS Russel Metals in 2007 and Leroux Steel in 2003. We believe that Apex Distribution’s entrepreneurial culture would be an excellent fit with our culture. Apex Distribution will continue to operate as a standalone unit, lead by Don White, its current President and CEO.”
Don White, President and CEO of Apex Distribution commented, “We are excited about our opportunity to contribute to the Russel Metals group of companies. Our combination accomplishes our shareholders’ objectives, while offering our employees and stakeholders advantageous future opportunities available through the strength and diversity of one of the largest metals distribution companies in North America.”
Marion Britton, Vice President and CFO commented, “The acquisition would be funded from our current cash position and would enable the company to effectively employ the funds from our recent issue of $300 million 6% Canadian Senior Notes. 2012 has been a very active year for Russel Metals with the acquisitions of Siemens Laserworks and Alberta Industrial Metals. We expect that the acquisition of Apex Distribution would be on terms that would be immediately accretive to earnings and would support our dividend.”
Russel Metals is one of the largest metals distribution companies in North America. It carries on business in three metals distribution segments: metals service centers, energy tubular products and steel distributors, under various names including Russel Metals, A.J. Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Alberta Industrial Metals, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, McCabe Steel, Mégantic Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec, Norton Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Siemens Laserworks, Spartan Energy Tubulars, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.
