Service Center Companies are Wheeling and Dealing
By Dan Markham
on Jun 6, 2018
Pent-up demand is often a driver in consumer markets, whether talking about automobiles or homes. It also serves as a tailwind in the industrial marketplace, as businesses look to invest in new transportation equipment and machinery when they emerge from the down cycle.
It seems it may also be a factor in the service center world.
On Tuesday, Ryerson announced the acquisition of fellow Chicago company Central Steel and Wire, one of the oldest names in the North American metals supply chain. The acquisition is the largest to date in what’s shaping up to be a banner year in the marketplace for distribution companies.
To date, there have been at least 17 acquisitions by service center companies, most of them involving the purchase of a smaller distributor. This far outstrips the pace of recent years, when the merger and acquisitions activity was much more muted.
The deals have included the purchases of two of Metal Center News’ Top 50 companies, No. 21 Central Steel and Wire and the previously announced acquisition of 39th-ranked Contractors Steel by Union Partners.
Union Partners, in fact, has been the most active company on the M&A front, with four deals to date. Prior to their largest acquisition of Livonia, Mich.-based Contractors Steel, the private equity company pulled Maksteel, Lamination Specialties and Heidtman Technology Center into the company’s ever-widening orbit.
And expenditures haven’t been limited to these deals. Major investments have been announced by Samuel, Steel Warehouse, Calstrip, TSA Processing, Flack Global Metals and Union Partners.
It's hard to say just how long this buying frenzy will keep up, but the willingness for so many companies to open their checkbooks over the course of the first half of the year is a strong sign of confidence in the industry for the foreseeable future.