#USA #Irving #Precast Concrete #Commercial Metals #Foley Products

Commercial Metals Company to Acquire Foley Products

Commercial Metals Company (CMC), listed on the NYSE as CMC, has taken a significant step to strengthen its market position by announcing the acquisition of Foley Products Company, a leading supplier of precast concrete solutions. This deal, valued at $1.84 billion, will provide immediate scalability to CMC's precast platform, elevating the company to become the third-largest player in the U.S. construction market. The acquisition is poised to enhance CMC’s presence, particularly in the Mid-Atlantic and Southeast regions, where Foley dominates.

Strategic Implications of the Acquisition

This acquisition is not merely a strategic maneuver but a well-calculated opportunity to tap into the rapidly growing precast concrete market. Precast products are essential in infrastructure projects, drainage, and utility management, making Foley's extensive operations a valuable addition. CMC’s President and CEO, Peter Matt, emphasized that this acquisition enables CMC to expand its capabilities significantly and unlock additional value through synergy with its pending acquisition of Concrete Pipe Precast (CPP).

Financial Benefits and Projections

Foley Products boasts industry-leading EBITDA margins and cash flow generation capabilities, owing to the long-established operational best practices it employs across its operations. CMC predicts that the acquisition will not only be immediately accretive to earnings per share but also contribute to free cash flow enhancements. By the third year post-acquisition, CMC expects annual synergies in the range of $25 million to $30 million, driven mainly by operational efficiencies and shared best practices between Foley and CPP. This anticipated synergy reflects the company's commitment to maximizing value and driving profitability through effective integration.

The Precast Concrete Market Landscape

The precast concrete sector is a rapidly expanding area within the construction industry, and CMC anticipates leveraging Foley's robust market penetration to capitalize on this growth. With approximately 17% of the U.S. concrete market share, the precast sector continues to present a strong strategic fit for CMC. Moreover, the company's growth outlook is buoyed by the increasing demand for durable and efficient construction solutions. Following this transaction, CMC will operate a total of 35 facilities across 14 states, positioning itself favorably against competitors and instilling confidence in its ability to deliver high-quality products.

Competitive Edge and Future Directions

The acquisition positions CMC to take advantage of overlapping business operations and market opportunities. Foley’s established presence in the southeastern U.S., combined with the capabilities of CPP, allows CMC to innovate and streamline its product offerings. Moreover, the deal is expected to transform CMC’s overall financial profile, enhancing core EBITDA margins and providing a reliable cash flow stream. As a result, CMC will focus on debt reduction, aiming to lower its net leverage below 2.0x within 18 months post-acquisition.

Conclusion

Commercial Metals Company's acquisition of Foley Products is a pivotal development in its strategy to expand its precast concrete operations. The integration of Foley into CMC’s portfolio not only enhances its market positioning but also reinforces its commitment to delivering quality construction solutions while driving growth and profitability. As CMC prepares for its next chapter, the company remains focused on utilizing its new capabilities to address the growing challenges in the construction industry effectively. Future investor calls will provide further insights into the financial implications and operational strategies following this significant acquisition.