Merfish United Fully Acquired by Reliance Steel & Aluminum Co.
Merfish United has twelve strategically situated distribution locations that service 47 states in the United States. Reliance Steel & Aluminum Co. announced on October 4 that it had purchased Merfish United, a master distributor of tubular construction goods in the United States, from One Equity Partners, a middle-market private equity firm, with effect from October 1.
Merfish United, based in Ipswich, Massachusetts, has twelve cleverly placed distribution sites that service 47 states in the United States. Merfish United's extensive product line comprises steel pipe, copper tubing, plastic pipe, electrical tube, and associated commercial, residential, municipal, and industrial construction items. The company’s net sales for the year ending June 30, 2021, were around USD 500 million. The present Merfish United squad, including management, will continue to be in place. Although the transaction's terms were not made public.
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Jim Hoffman, Reliance's Chief Executive Officer, stated that they are delighted to add Merfish United to the Reliance Family of Companies and widen our emphasis outside typical metals service centres. This purchase is consistent with their acquisition strategy of diversifying their product, end market, and geographic offerings by acquiring immediately accretive firms led by excellent management teams. Merfish United further broadens the exposure to copper and plastic materials and provides Reliance with a foundation for future expansion in the neighbouring industrial distribution area.
Jamie Koven, senior managing director at OEP, said that they saw Merfish as a unique company with significant development possibilities and a competent management team. They are pleased with their eight-year collaboration with Merfish United's CEO Greg Leidner, chairman Gerald Merfish, and their staff to become one of North America's leading master distributors of competitively priced model pipe and tube goods. In addition, from operational improvements to executing a revolutionary acquisition strategy, OEP has been an outstanding partner to Merfish United. Greg Leidner further added that the company has benefited immensely from its experience in developing market-leading industrial enterprises, and the next phase of development is exciting.
Reliance Steel & Aluminum Co., established in 1939 and based in Los Angeles, is a global diversified metal solutions provider and North America's biggest metals service centre provider. The company provides value-added metals processing services and distributes a comprehensive line of over 100,000 metal products to more than 125,000 clients in various sectors through a network of about 300 facilities in 40 states and 13 countries outside of the United States. Small orders with rapid turnaround and rising degrees of value-added processing emphasise Reliance.
Reliance Steel's stock has risen 28.3 percent in the last year, compared to an industry-wide increase of 84.2 percent. For the current year, the company's expected profits growth rate is 147.7 percent. The firm reported adjusted profits of USD 5.06 per share in the second quarter, up from USD 1.36 in the prior quarter and topping the Zacks Consensus Estimate of USD 4.94. It made USD 3,418.8 million in net sales, up 69.3 percent year over year and above the Zacks Consensus Estimate of USD 3,118.1 million.
Reliance Steel is positive about the economic climate, with strong demand in most end-user industries. Nevertheless, challenges like metal supply shortages and supply-chain interruptions that impacted shipments in the second quarter are projected to continue in the third quarter. It expects to see a one percent decrease to one percent increase in tonnes sold in the third quarter compared to the previous quarter. Furthermore, metal prices at the start of the third quarter are higher than the second-quarter average. As a result of this increase, the business expects its average selling price per tonne sold to increase by 7-9 percent in the third quarter. The business forecasts adjusted earnings per share for the quarter to range between USD 5.55 and USD 5.75.