Steel Dynamics, Fort Wayne, Ind., has made a move downstream with the acquisition of 75 percent of the equity interest in United Steel Supply, Austin, Texas. United Steel Supply is a distributor of painted Galvalume flat-roll steel for roofing and siding applications. The company ranked as the 30th-largest service center in the most recent MCN
SDI purchased the three-quarters share for $134 million. The company has an option to purchase the remaining 25 percent in the future.
"United Steel Supply provides an exciting opportunity to expand our painted Galvalume value chain, by affording us with a better opportunity to provide our high-quality flat-roll steel directly to this important market segment," said Mark D. Millett, President and CEO of SDI. "United Steel Supply has a reputation for best-in-class service, short supply lead-times and strong customer relationships. We believe this partnership will provide a strong cultural fit with Steel Dynamics."
United Steel Supply distributes painted and coated flat roll steel coils to the niche regional roll-former market, serving the roofing and siding industry. USS operates four distribution centers, located in Mississippi, Indiana, Arkansas and Oregon.
As part of the transaction, current United Steel Supply owners Bret Curtis and Will Waldrip will continue to lead USS in their current capacities as president and vice president, respectively. Under Curtis and Waldrip's leadership, United Steel Supply has achieved 26 percent compounded annual revenue growth rate since inception in 2007.
Steel Dynamics' combination of Galvalume manufacturing and on-site paint application presents attractive synergies in the production of painted Galvalume, which is the principal product distributed by United Steel Supply, SDI executives claim. Due to the smaller individual order size and extensive service levels required by USS's large and diverse customer base, this transaction adds a new, complementary distribution channel for Steel Dynamics and connects it to a rapidly growing industry segment with customers that do not traditionally purchase steel directly from a steel producer.
Steel Dynamics expects this transaction to provide continued growth in one of its highest-margin flat-roll steel products. Steel Dynamics' Columbus Mississippi and Butler Indiana Flat Roll divisions already supply flat roll steel to USS, and the volume is expected to grow.