Two of the largest recyclers have merged to create the largest North American publicly traded scrap-metal recycler. The company will operate under the name Sims Metal Management.
Sims Group Ltd, based in Australia, is acquiring Metal Management, Inc. (MM), one of the largest full-service metal recyclers in the U.S., for $1.49 billion in stock. Sims is looking to cut costs and benefit from rising demand for scrap metal.
MM has 53 recycling facilities in 17 states, including many U.S. metropolitan areas, including Chicago, Cleveland, Denver and Houston.
MM stockholders will receive 2.05 shares in Sims for each share they hold in MM, an 18.2% premium over the September 21 closing price.
When the merger is completed, Sims Metal Management will have more than 200 recycling operations globally, handling about 15 million tons of recycled metal each year. For the first six months of 2007, Sim’s revenue exceeded A$8.5 billion. The combined company will save Sims about $35 million a year and generate $6.8 billion in annual sales.
Metal Management gains by getting more global exposure, while Sims gains in U.S. exposure.
Sims will retain its primary listing on the ASX in addition to its NYSE ADR listing, but plans to move its headquarters to New York. Analysts view the transaction as a sign that the metals recycling industry is ready to consolidate.
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