Nucor Corp. kicked off its own version of March madness with the announcements of two deals that will expand its operations domestically and abroad.
Charlotte-based Nucor entered into a joint venture with Japanese steel producer Mitsui & Co. Ltd. to form a new company called NuMit LLC, the companies said on March 3.
Under the agreement, each company will indirectly own a 50% interest in NuMit, which will invest in various steel and steel-related activities in North America and globally.
NuMit's first investment will be acquiring all the assets Mitsui currently holds in Louisville, Ky.-based Steel Technologies Inc.
Essentially, the deal amounts to Nucor purchasing a half interest in Steel Technologies, a company with an estimated $1 billion in sales, which Mitsui had paid $550 million for in June 2007, notes steel industry analyst Michelle Applebaum in her newsletter.
"This is a very meaningful acquisition for the company, although we don't anticipate much accretion initially (no disclosure on purchase price, profitability), it's a whole new platform for growth for Nucor -- and the more platforms, the more growth," Applebaum wrote.
Steel Technologies operates 23 sheet processing facilities throughout the United States, Canada and Mexico. It will continue to operate as an independent unit with the existing management team maintaining responsibility for the business.
At A Glance
Primary Industry: Primary Metals
Number of Employees: 21,700
2008 In Review
Revenue: $23.66 billion
Profit Margin: 7.74%
Sales Turnover: 1.71
Inventory Turnover: 9.78
Revenue Growth: 42.61%
Return On Assets: 18.63%
Return On Equity: 35.81%
Steel Technologies will carry out Nucor's previously announced plans to construct a greenfield flat-rolled processing center in Monterrey, Mexico. The processing center is expected to include pickling, slitting and cut-to-length capabilities to serve customers in Mexico.
Meanwhile, just two days earlier Nucor said it had purchased Ocala Recycling LLC through its subsidiary The David J. Joseph Co. for an undisclosed amount as part of its plan to grow its scrap-processing industry and expansion efforts in Florida.
Ocala Recycling, a subsidiary of Blaze Metals LLC, operates four Ocala, Fla., facilities. The four yards, which includes an automobile shredder, totals more than 100,000 tons annually. With the addition of Ocala, DJJ operates a total of 15 automobile shredders throughout its facilities.
Ocala Recycling was founded in 1988 and currently employs 90 people.
DJJ will operate the Ocala Recycling facilities as part of Trademark Metals Recycling LLC.
Since Nucor acquired DJJ in March 2008, DJJ has added approximately 1.1 million tons of scrap processing capacity and 27 locations through five acquisitions and opened two greenfield yards, the company said.
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