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Reckoning with Reliance: like metals that are melded to create desirable new alloys, the alliance of Reliance and EMJ creates a competitor with formidable strength. What are the implications of this "alloyance" for the rest of the service center market?

Article Excerpt
THE LIKELY MERGER of Reliance Steel and Aluminum Co. and Earle M. Jorgensen Co., widely praised as a smart move for both companies, is not expected to have any immediate or dramatic effect on the competitive dynamics of the service center market. Industry observers say the implications of the proposed $934 million merger of Los Angeles-based Reliance and Lynwood, Calif.-based EMJ will play out over the longer term as the industry continues to consolidate.

EMJ shareholders are set to vote on the merger in a special meeting March 31. If approved, the transaction will close April 3. While analysts say there is a remote possibility another bidder could emerge at the last minute, they almost unanimously approve of the Reliance-EMJ combination, calling it a good fit at a good price.

With EMJ's volume and assets in its portfolio, Reliance will nip at the heels of Ryerson Inc., long the largest service center chain in North America. Reliance was ranked No. 2 on the most recent Metal Center News Service Center Top 50 with over $2.9 billion in 2004 revenues vs. Ryerson's industry-leading $3.3 billion. Ryerson recently reported full-year 2005 sales of $5.78 billion vs. Reliance's $3.37 billion.

Ranked No. 8 with nearly $1.5 billion in 2004 revenues, EMJ recently reported sales of $1.29 billion through its first three fiscal 2006 quarters. EMJ is one of the largest distributors of...

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