Metal Fabrication M&A Industry Update
Metals companies are seeking downstream acquisitions of fabricators to participate in market growth and increase margin. Fabrication companies are experiencing substantial growth from solar, truck trailer, and automated warehouse demand, driven in part by COVID and the continued supply chain disruption.
Gibraltar Industries (NasdaqGS:ROCK) is pursuing acquisitions to advance its stated goal to become a “one-stop shop in the solar development value chain.” In January 2021, the company paid $220 million for TerraSmart, which provides screw-based, ground-mount solar racking technology. The move also satisfies the strategic objective to increase “participation in higher value and faster growing markets.” The valuation equates to a 7.9x-8.5x multiple of projected 2020-adjusted EBITDA. “Adding TerraSmart …to our existing solar business significantly increases our presence in the $14.3 billion domestic solar energy market, strengthens our renewable energy platform, and advances our ambition to deliver higher growth and returns,” said CEO Bill Bosway.
Nucor (NYSE:NUE) is anticipating continued strong growth in key end-use markets for steel racking, citing eCommerce warehouses, data centers, and food and beverage storage. Nucor has acquired two manufacturers of steel racking solutions over the last 12 months, Elite Storage Solutions (April 2022) and Hannibal Industries (August 2021). Elite’s Georgia and Arizona locations establish a southeast manufacturing presence and complement Hannibal’s footprint in California and Texas, enabling Nucor to serve racking customers nationwide. Nucor paid $370 million for Hannibal, valuing the business at a 6.9x multiple of EBITDA. “Acquiring Hannibal Industries gives us a new growth platform and broadens our offering to the fast-growing warehouse channel, and complements our current product capabilities, including beams, joists and deck, metal buildings, and insulated metal panels,” said Leon Topalian, Nucor CEO. “This acquisition reflects our strategy of expanding beyond our core steel businesses and establishes a new area for Nucor to pursue a market leadership position.” Giff Daughtridge, President of Sheet and Tubular Products at Nucor, also commented on the buy, saying, “Adding steel racking solutions to our product portfolio expands our ability to serve our customers in the fast-growing warehouse and distribution market. This acquisition complements our existing product capabilities in this area.”
Nucor acquired the Insulated Metal Panels Business (IMP) from Cornerstone Building Brands (NYSE:CNR) in August 2021, paying $1 billion for the business, or approximately 10x pre-pandemic EBITDA, inclusive of expected synergies. “Today’s announcement accelerates our vision to broaden value-added solutions that Nucor provides to our targeted end markets,” said Topalian. IMP counts warehousing among its end-use markets.
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If you are interested in discussing the current state of M&A within the metals industry and how it may impact your future strategic planning, please contact us using the form provided below. We welcome the opportunity to learn how we can assist you in navigating today’s M&A climate and help you maximize your strategic objectives. BGL’s Metals and Metal Processing team, led by Vincent J. Pappalardo, leverages an extensive network of relationships with sector’s most acquisitive strategic buyers to help our clients maximize the value of their transaction.