Steel Dynamics Subsidiary Completes Acquisition of Recycle South
06/17/2008 - Steel Dynamics subsidiary OmniSource Corp. has completed its acquisition of the remaining 75% equity interest in Spartanburg, S.C., based Recycle South, LLC.
Steel Dynamics subsidiary OmniSource Corp. has completed its acquisition of Recycle South, LLC.
OmniSource had already owned 25% of Recycle South, and acquired the remaining 75% equity interest for a purchase price of approximately $515 million, comprising 3,938,000 shares of Steel Dynamics common stock, valued at approximately $140 million; cash of $232 million; and the assumption of certain liabilities, including net debt of approximately $143 million. This results in a total enterprise value of about $640 million.
"This transaction significantly expands our recycled metals business platform created by the acquisition of OmniSource in October 2007,” commented Steel Dynamics Chairman and CEO Keith Busse. “It demonstrates SDI's strategic commitment to the continued expansion of ferrous and nonferrous recycling, which is an important element of our overall growth plan. The additional capacity of the Recycle South operations brings our company's total annual ferrous scrap processing capacity to approximately seven million tons.”
On an annualized basis using actual results from September of 2007 to April of 2008, Recycle South generated revenues of approximately $730 million and earnings before interest, taxes, depreciation and amortization of approximately $105 million (which results in a purchase multiple of about six times) from the processing of 1.4 million tons of ferrous scrap and 150 million pounds of nonferrous scrap.
“We are pleased that the transaction has closed within the expected timeframe, and look forward to a smooth integration,” said Busse. “The addition of the Recycle South business to OmniSource will increase both the size and scope of our scrap operations, and establish a platform for continued growth.”
Recycle South, which will now be called OmniSource Southeast, will operate as a division of OmniSource Corp. As part of OmniSource, all current management will remain in place and will continue to focus on ferrous and nonferrous scrap processing, brokerage, and the industrial scrap management needs of its customers.
Recycle South, one of the largest regional scrap metal recycling companies in the nation, is headquartered in Spartanburg, S.C. The company employs 700 people in 22 locations throughout North Carolina, South Carolina, and Georgia.
