Sims Expands its Portfolio
Sims Ltd., has announced that its Australian business division, Sims Metal, is set to obtain all properties owned by United States-based Baltimore Scrap Corp. (BSC).
Established in Sydney over 100 years ago, Sims Metal has experienced quite a transformation since its early beginnings. Today, it stands as one of the leading metal recycling companies across the globe.
Annually, Sims Metal recycles over 10 million tons of metal throughout its numerous operations worldwide. With a mission to create a world without waste and seeking to protect the environment, the company is adapting and preparing for the notable industrial and ecological modifications in society, as well as within the recycling industry.
BSC’s Well Positioned Scrap Yards
Baltimore Scrap Corp. (BSC) is a well-known metal recycler in the Mid-Atlantic region, boasting 17 facilities across five states—Maryland, Virginia, Pennsylvania, New York, and New Jersey. Four of these locations additionally house an auto shredding plant and handle up to 600,000 metric tons of scrap yearly.
BSC’s yards have a major advantage, according to Sims, with access to an “extensive rail, barge and port infrastructure, and the business is well-positioned with attractive proximity to both growing domestic demand markets and export [markets].”
Completion of the acquisition is expected to be finalized in October, as long as closing conditions, which include necessary regulatory approvals, have been met or waived.
“Baltimore Scrap Corp is a company we have admired for many years,” stated Alistair Field, CEO and managing director of Sims Ltd. “They have a strong management team who has built an excellent business over many years.”
“This acquisition is a highly complementary fit with our strategy to expand the metal recycling business in North America and increase our diversity of sales channels to growing U.S. domestic demand for ferrous and nonferrous scrap metal. I welcome the Baltimore Scrap Corp team and their group of affiliates to the Sims family.”
A Streak of Acquisitions
This year, Sims made headlines with its purchase of the former Atlantic Recycling Group in Maryland and Northeast Metal Traders out of Philadelphia. However, it was noted that these purchases may raise concern about the large number of metal recycling facilities in the Mid-Atlantic region now controlled by a single operator.
Competition in the area consists of the Maryland, New Jersey, and Pennsylvania operations of UK-based EMR Ltd., as well as several independent operators like Mazza Iron & Steel’s shredder in Fairless Hills, Pennsylvania.
Sims is currently planning to purchase the firm for $177 million, plus additional cash and other variables to be concluded at settlement.
According to Sims’ reports, the transaction results in a figure of 5.4 for enterprise value/EBITDA (earnings before interest, taxes, depreciation, and amortization) over three years on average. Post-synergies, this multiple is projected to decrease to 4.2.
“The BSC acquisition is another example of our capital recycling strategy,” Sims Chief Financial Officer Stephen Mikkelsen added. “We anticipate the acquisition to be substantially funded through the redeployment of proceeds from non-core asset sales and other assets that are not likely to achieve their required rate of return.”
