#Canada #Toronto #Russel Metals #service centers #Kloeckner Metals

Russel Metals Expands Its Reach

In a strategic move to enhance its operations in North America, Russel Metals Inc. (TSX: RUS) has confirmed its acquisition of seven service center locations from Kloeckner Metals Corporation. This acquisition, valued at approximately $118.6 million, is set to strengthen Russel’s existing footprint in the United States and bolster its revenue-generating capabilities in key markets.

The Details of the Acquisition

The agreement was unveiled on September 28, 2025, detailing that the purchase price would encompass about $67.1 million for working capital and around $51.5 million for the associated property, plant, and equipment. Russel will gain control over service centers located in:

• - Dubuque, Iowa
• - Charlotte, North Carolina
• - Suwanee, Georgia
• - Houston, Texas
• - Austin, Texas
• - Jacksonville, Florida
• - Pompano Beach, Florida

These locations not only complement Russel Metals’ existing centers but also offer a viable expansion into the South and Mid-West markets of the U.S., where they previously had limited presence.

Financial Implications and Revenue Growth

The seven service centers have demonstrated impressive financial performance, generating average annual revenues of approximately $500 million between January 2023 and June 2025, along with an adjusted EBITDA of about $20 million during the same period. This acquisition is anticipated to contribute significantly to Russel’s revenue, which is expected to surpass 50% of its total income coming from U.S. operations, a notable increase from 30% in 2019 and 39% in 2024, reflecting the company’s commitment to growth and diversification.

John Reid, President and CEO of Russel Metals, expressed enthusiasm regarding this acquisition, stating, "The acquisition of these seven locations is complementary to our existing U.S. assets and will enhance our operational reach in vital regions."

A Long-Term Growth Strategy

The strategic intentions behind this acquisition align well with Russel Metals’ long-term objectives in the North American market. Reid highlighted the expectation of operating efficiencies derived from enhanced inventory management, improved procurement strategies, and future reinvestments aimed at modernizing facilities and upgrading equipment.

The integration of the acquired service centers is expected to unfold over the next two to three years, during which the company plans to optimize operations and align them with its existing management systems.

Financing the Deal

Russel Metals intends to finance this acquisition using cash on hand or through adjustments to its existing credit facility, which stood at $566 million as of June 30, 2025. The completion of this transaction is subject to standard closing conditions and is anticipated to close in the fourth quarter of 2025 or the first quarter of 2026.

Upcoming Investor Conference Call

To further discuss this acquisition, Russel Metals will hold an investor conference call on September 29, 2025, at 9:00 a.m. ET. Interested parties can join by calling the designated numbers provided in the announcement. A replay will also be made available for those unable to attend the live session.

About Russel Metals

Russel Metals is recognized as one of North America's largest metals distribution firms, with a commitment to expanding its value-added processing capabilities. The company operates through three primary segments: metals service centers, energy field stores, and steel distributors, ensuring a well-rounded service offering that meets the diverse needs of its customers. With this significant acquisition, Russel Metals is poised to further establish its leadership in the metals industry, aiming to achieve greater operational efficiencies and maximize shareholder value.

Conclusion

As Russel Metals embarks on this acquisition, analysts will be closely watching how the integration of Kloeckner's service centers will influence its operational dynamics and market positioning. The strategic fit and future potential of this partnership could redefine the landscape of metals distribution in North America, enhancing Russel Metals’ capabilities and reach in a competitive industry.