Steelmaker BlueScope has made its second major US acquisition in six months to help bolster its growing presence in the market, especially in one of its specialities, coated steel products.
BlueScope says it will pay half a billion US dollars or $A670 million to acquire the second biggest metal painter in the US, Coil Coatings.
BlueScope says it will fully fund the acquisition with cash from its balance sheet, with the transaction expected to complete in late 2020, and will contribute immediately to earnings per share.
The news won a cautious thumbs up from the market on Monday with the shares rising 1.2% to $20.74.
Managing director Mark Vassella said the acquisition almost tripled the company’s US metallic coating and painting capacity – a sign of where BlueScope sees future growth in the US coming from especially in its key markets of the Midwest and Southwest of the country.
“The acquisition of Coil Coatings is a significant step forward in our growth plans for North America,” Vassella said.
Coil Coatings has a total capacity across several facilities of about 900,000 tonnes per annum, with its metal painting mostly serving commercial and industrial construction.
The purchase will see BlueScope’s metallic coating and painting capacity rise to over 1.3 million tonnes a year, from around 475,000 tonnes a year at present.
The investment brings BlueScope’s investment in North America to more than $4.5 billion following investments in its US North Star mini-mill and the establishment of BlueScope Recycling as well as the 2021 acquisition of a major scrap business near its North Star, Ohio steelmaking business where a major expansion is nearing completion.
In late 2021, BlueScope paid $US240 million ($A324 million) for the MetalX scrap steel recycling business which was (and still is) one of the big suppliers of feedstock for the North Star steel mill in Ohio which is by far BlueScope’s best performing business.
