Reliance Buys PNA Group for $1.1 Billion

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Reliance Steel & Aluminum Co. said Tuesday that it has agreed to buy PNA Group Holding Corp. for $1.1 billion.


The Los Angeles-based steel and aluminum distributor said that the deal is a move to expand the company’s stance in the Mexican market as well as add new products.


Reliance said Tuesday in a statement that the deal will be financed through credit facilities and $750 million in new shares and debt securities and expects to complete the acquisition from Platinum Equity LLC, which bought the company in May 2006, within 60 days. PNA will add steel plate, sheet and bar products to Reliance’s offering of more than 100,000 products.


“The PNA operations complement our existing business and add new products in many geographic areas,” Chief Executive David Hannah said in a statement. “Through the PNA joint ventures, we also gain entry into a new market for us in Mexico.”


This is Reliance’s second acquisition of 2008 the steel distribution giant bought Bristol, Conn.-based Dynamic Metals International LLC in April. Reliance has averaged nearly three acquisitions per year since going public in 1994.


PNA, based in Atlanta, posted 2007 sales of $1.6 billion and has 30 steel service centers and five joint ventures in the United States and Mexico which will be added to Reliance’s 217 locations in the United States, Belgium, Canada, China, South Korea and the United Kingdom.


Reliance reported strong first quarter earnings in April but was wary about the year going forward.


“Pricing for our products was strong with significant increases in carbon steel, leading to improved gross profit margins,” Hannah said in April. “[But] demand remains more difficult to predict therefore we do not expect any significant changes in demand in any of our market segments.”


Shares in Reliance jumped 5 percent to $73.16 in early trading Tuesday. Shares are up 38 percent for the year.

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