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Article Excerpt
METAL CENTER NEWS has tracked every service center merger or acquisition reported in the past decade, with buyers and sellers recorded on the following chart. Since January 1998, about 270 deals were announced, not counting an unknown number of private transactions and unreported business failures that may have contributed to the market's consolidation.
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Growth through acquisition is not a strategy reserved for just the largest companies. About 125 different service centers of all sizes were involved in those 270 transactions. The Top 10 service centers in this year's MCN ranking (see page 22) accounted for about 80 of the purchases.
The most aggressive multiple acquirers of the past 10 years have included: A.M. Castle, Alro Steel, Copper and Brass Sales, Edgen Murray, Esmark, Gibraltar, Macsteel, Marmon/Keystone, Metals USA, O'Neal Steel, Platinum Equity, Reliance, Russel Metals, Ryerson, Samuel, Steel Technologies and ThyssenKrupp.
Looking at recent history, the weak economy has slowed the pace of the deal making this year. Through the first eight months of 2008, about a dozen service centers changed hands. That compares to nearly two-dozen deals in each of the previous two years.
According to Census Bureau data, which is updated every five years, there were about 11,400 service center locations and offices in the United States in 2002, down 3.6 percent from 1997. New 2007 economic census data is due to be published next year. If it shows a comparable rate of decline, the industry will still have approximately 11,000 locations.
Only about 1,500 of those locations are operated by the Top 50 companies in this year's MCN service center ranking, which confirms that the metal distribution industry remains highly fragmented and competitive despite a decade of consolidation.
Decade of Service Center Consolidation JANUARY 1998 TO JULY 2008 Date Buyer Acquisitions Jul.-08 Steel Warehouse Co. Chesterfield Steel Reliance Steel & Aluminum Co. PNA Group PNA Group Sugar Steel Jun.-08 Namasco Corp. Taylor Equipment and Machine Tool Co. May-08 Reliance Steel & Aluminum Co. Dynamic Metals International LLC Republic Private Equity Cammalloy Inc. Mar.-08 O'Neal Steel Inc. TAD Metals Inc. Feb.-08 Burgon Tool Steel Co. Inc. Kloster Steel Co. Lapham-Hickey Steel Corp. Hubbell Steel A.M. Castle & Co. Metals UK Group PNA Group Precision Flamecutting & Steel LLP Jan.-08 Berkshire Hathaway Marmon Holdings (60%) Dec.-07 Rolled Metal Products Inc. Torrington Brass & Steel...
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