7/25/2016 1:04:00 PM
HEADLINES
ACQUISITIONS: Steel Dynamics Acquiring Vulcan Threaded Products
Steel Dynamics Inc. agreed to acquire 100% of one of its customers – Vulcan Threaded Products Inc. – for $126 million.
Founded in 1978, Alabama-based Vulcan manufactures threaded rod products, cold drawn and heat treated bar.
“During 2015, we identified the pursuit of higher-margin downstream business opportunities that utilize our steel products in their manufacturing processes, as one of our target growth objectives,” stated Steel Dynamics CEO Mark Millett.
“A strategy intended to reduce volatility during both strong and weak market cycles, given steel raw material supply optionality. During weak steel demand environments these businesses could purchase steel internally from our own mills, thus increasing SDI’s steel mill utilization. As a consumer of special-bar-quality products currently produced at our Engineered Bar Products Division, Vulcan depicts this model perfectly and fits well within our core operating strengths.”
Vulcan shipped approximately 89,000 tons of threaded rod, cold drawn and heat treat bar during the past year ended March 31, 2016.
Historically Vulcan has purchased nearly 20,000 tons of steel from Steel Dynamic’s bar division. Based on capabilities, Millett believes this internal volume could grow to 30,000 and 50,000 tons, or nearly 10% of EBD’s total 2015 shipments.
“Vulcan has been a valued customer of our Engineered Bar Products Division for over a decade. I congratulate Bill and Kent Upton on the creation of a tremendous company and team. We are looking forward to welcoming the employees and customers of Vulcan into the Steel Dynamics family. We are excited to add the quality of Vulcan’s brand and products to our portfolio,” Millett said.
The transaction is valued at approximately 5.0 times trailing twelve month March 31, 2016 EBITDA, excluding potential income tax-related benefits. The transaction is subject to customary conditions and receipt of regulatory approvals and is due to close during August 2016.
Vulcan Steel Products began as Vulcan Threaded Rod Company with Bill Upton, Bill Jenkins and Kent Upton as owners.
Initially Vulcan marketed products primarily to smaller distributors who had been experiencing back orders of up to six months. Vulcan opened with four Teledyne/Landis threaders producing only 2 inch diameters. The owners credit the short lead times for the early growth.
Vulcan Threaded invested resources in new equipment which allowed the production of rods in all diameters, Bill Upton explained, “Just having a couple of threaders to service small accounts won’t work. In order to be a successful manufacturer you’ve got to know what is happening in the market today and respond very quickly.”
By the mid 1980’s, Vulcan evolved to manufacture anchor bolts, u-bolts, eye bolts, and special order jobs. Vulcan Threaded Rod Company officially became Vulcan Threaded Products.
In 1997, Vulcan expanded into the cold finish steel bar market. Also in 1997, Vulcan Threaded Products saw an opportunity in the rapid growth of the ASTM A193 B7 threaded rod market and the lack of domestic commercial heat treating for long bars and began construction of an induction heat treating facility.
The once small regional fastener manufacturer has grown to have three divisions: Vulcan Threaded Products, Vulcan Heat Treating, and Vulcan Cold Finished. Vulcan is headquartered at 10 Crosscreek Trail, Pelham, AL 35124. Tel: 800 633-4726 Web: vulc.com
Founded in 1993, Steel Dynamics (NASDAQ-GS: STLD) is one of the largest U.S. steel producers and metals recyclers based on estimated annual steelmaking and metals recycling capability, with annual sales of $7.6 billion in 2015.
Steel Dynamics has approximately 7,500 employees, and manufacturing facilities throughout the U.S. Holdings include six electric-arc-furnace steel mills, ten steel coating lines, an iron production facility, approximately 75 metals recycling locations and eight steel fabrication plants. Steel Dynamics is headquartered at 7575 W. Jefferson Blvd., Fort Wayne, IN 46804. Tel: 260 969-3500 Web: steeldynamics.com ©2016 GlobalFastenerNews.com
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