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Reliance Steel & Aluminum Co. Agrees to Acquire American Alloy Steel, Inc.

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Reliance Steel & Aluminum Co. (RS) has agreed to acquire American Alloy Steel, Inc., a prominent distributor of specialty carbon and alloy steel products. American Alloy, with annual sales of $310 million, brings enhanced value-added processing capabilities to Reliance, expanding its product portfolio and fabrication capabilities.
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The acquisition of American Alloy Steel, Inc. by Reliance Steel & Aluminum Co. represents a significant consolidation in the metals distribution industry. This move allows Reliance to diversify their product offerings, specifically in specialty carbon and alloy steel plate, a niche but critical component in various heavy industries. The strategic expansion of value-added processing capabilities like burning, cutting, rolling and beveling can be expected to enhance their competitive edge and possibly generate operational synergies.

The reported annual net sales of $310 million for American Alloy underscores the financial materiality of this transaction. However, without the terms of the transaction disclosed, it is challenging to ascertain the immediate financial impact on Reliance's balance sheet and earnings per share. Still, investors should monitor future financial disclosures for the effect on Reliance's revenue growth and profit margins, especially considering American Alloy's established market presence and customer base across North America and international markets.

From a financial perspective, the acquisition's timing and scale are crucial. Reliance's capital allocation to this acquisition, as opposed to other potential investments or returning capital to shareholders, suggests confidence in the growth prospects of American Alloy's product lines and customer segments. The focus on value-added services may indicate a strategic shift towards higher-margin offerings, which could improve overall profitability.

Investors should consider the potential for cost savings through economies of scale and the integration of American Alloy's operations into Reliance's existing infrastructure. Long-term benefits may include enhanced bargaining power with suppliers and an expanded geographical footprint. However, integration risks and the potential for cultural clashes should not be overlooked, as these can impact the anticipated synergies and overall success of the merger.

The mention of regulatory approval as a condition for closing the deal indicates that this transaction will be scrutinized for antitrust implications, given the size of the companies and their market influence. The outcome of this regulatory process is a key factor for stakeholders, as any imposed conditions or delays could affect the anticipated benefits of the acquisition.

Additionally, the retention of American Alloy's current team, including management, post-closing, is a strategic decision aimed at ensuring business continuity and retaining industry expertise. This approach may facilitate a smoother transition and integration process, mitigating some of the legal and operational risks commonly associated with mergers and acquisitions.

SCOTTSDALE, Ariz., Feb. 14, 2024 (GLOBE NEWSWIRE) -- Reliance Steel & Aluminum Co. (NYSE: RS) announced that it has entered into a definitive agreement to acquire all of the outstanding equity interests and related real estate assets of American Alloy Steel, Inc. (“American Alloy”), a leading distributor of specialty carbon and alloy steel plate and round bar, including pressure vessel quality (PVQ) material. Headquartered in Houston, Texas and founded in 1971, American Alloy operates five service centers in the U.S. and a plate fabrication business. In addition, American Alloy has a joint venture in Canada. American Alloy sells to customers located throughout the United States, Canada, and Mexico, as well as certain international markets, supporting military, infrastructure, power generation, utility, refining, petrochemical, mining, shipbuilding, and marine applications. The addition of American Alloy will increase Reliance’s value-added processing capabilities in the areas of burning, cutting, rolling, and beveling. For the twelve months ended December 31, 2023, annual net sales for American Alloy were approximately $310 million.

“We are very excited to welcome American Alloy to the Reliance family,” commented Karla Lewis, President and Chief Executive Officer of Reliance. “They have been a well-known leader in the specialty carbon steel plate market for decades with strong relationships with both customers and suppliers, along with committed, long-tenured employees, and a solid reputation for customer service and product expertise. American Alloy adds specialty carbon steel plate to Reliance’s product portfolio as well as new fabrication capabilities. We look forward to continuing to grow the American Alloy business, especially in value-added processing, as well as leveraging our collaboration efforts to expand the product and service offerings of both American Alloy and our existing Reliance companies as they find opportunities to work together and grow.”

The transaction is expected to close within the next 60 days, subject to regulatory approval and customary closing conditions. The current American Alloy team, including management, is expected to remain in place post-closing. The terms of the transaction were not disclosed.

About Reliance Steel & Aluminum Co.
Founded in 1939, Reliance Steel & Aluminum Co. (NYSE: RS) is a leading global diversified metal solutions provider and the largest metals service center company in North America. Through a network of more than 315 locations in 40 states and 12 countries outside of the United States, Reliance provides value-added metals processing services and distributes a full line of over 100,000 metal products to more than 125,000 customers in a broad range of industries. Reliance focuses on small orders with quick turnaround and value-added processing services. In 2022, Reliance’s average order size was $3,670, approximately 50% of orders included value-added processing and approximately 40% of orders were delivered within 24 hours. Reliance Steel & Aluminum Co.’s press releases and additional information are available on the Company’s website at rsac.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expect,” “anticipate,” “believe,” and similar words. These forward-looking statements may include statements concerning Reliance’s acquisition of American Alloy and discussions of Reliance’s future performance. Forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future performance. Risks and uncertainties related to the proposed transaction include, but are not limited to, delays in or failure to obtain any required governmental and regulatory approvals. The expected benefits of the transaction may not materialize as expected. Actual outcomes and results may differ materially from these forward-looking statements as a result of various important factors, including, but not limited to, those disclosed in our most recent Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) and subsequent reports. These forward-looking statements are based on management's expectations and assumptions as of today’s date and Reliance disclaims any obligation to publicly update or revise any forward-looking statements.

CONTACT:         
(213) 576-2428
investor@rsac.com

or Addo Investor Relations
(310) 829-5400


FAQ

What did Reliance Steel & Aluminum Co. (RS) announce?

Reliance Steel & Aluminum Co. (RS) announced the acquisition of American Alloy Steel, Inc., a leading distributor of specialty carbon and alloy steel products.

What are the key offerings of American Alloy Steel, Inc.?

American Alloy Steel, Inc. specializes in specialty carbon and alloy steel plate and round bar, including pressure vessel quality (PVQ) material.

Where is American Alloy Steel, Inc. headquartered?

American Alloy Steel, Inc. is headquartered in Houston, Texas.

What is the annual net sales figure for American Alloy Steel, Inc.?

For the twelve months ended December 31, 2023, annual net sales for American Alloy Steel, Inc. were approximately $310 million.

When is the transaction expected to close?

The transaction is expected to close within the next 60 days, subject to regulatory approval and customary closing conditions.

Reliance, Inc.

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About RS

reliance steel & aluminum co. (nyse:rs) headquartered in los angeles, california, is the largest metals service center company in north america. through a network of more than 300 locations in 39 states and 12 countries outside of the united states, the company provides value-added metals processing services and distributes a full line of over 100,000 metal products. these products include galvanized, hot-rolled and cold-finished steel, stainless steel, aluminum, brass, copper, titanium and alloy steel sold to more than 125,000 customers in a broad range of industries. some of these metals service centers provide processing services for specialty metals only. in the mid-1970's, the company began to establish specialty metals centers stocked with inventories of selected metals and equipped with automated materials handling and precision cutting equipment. beginning in the early 1990's, owners of successful service center companies started to sell these companies as they were reaching re