Consolidated effort

Columns - Editor’s Letter

A number of deals closed in the fourth quarter of 2021.

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January 4, 2022

In the summer of 2021, Recycling Today published the article “Driving deals,” written by Vince Pappalardo, who leads the Metals practice at Brown Gibbons Lang & Co., an independent investment bank serving the middle market. In that article about merger and acquisition (M&A) activity, he writes, “We expect M&A activity in the metal recycling market to be robust through the remainder of 2021. The current economic outlook, industry dynamics, the aging demographic of scrap company owners and tax rate changes are going to drive a busy second half of the year. Talk in the market of at least a dozen potential deals ranging in size from $5 million to $300 million-plus already provides insight into future activity. The final tally of completed transactions and the prices paid will tell the rest of the story.”

In the fourth quarter of 2021 alone, a number of deals were announced or closed, with the most recent (as of press time) being Pittsburgh-based AMG Resources Corp.’s purchase of Strauss Industries Inc., which AMG calls the largest and oldest scrap metal recycler in West Virginia.

That transaction is the second one in a week where an auto shredding plant changed hands. Previously, Sims Metal announced its purchase of Atlantic Recycling Group, which operates a shredder in Baltimore.

“In the fourth quarter alone, a number of deals were announced or closed.”

Other auto shredders also changed ownership last year in acquisitions by Cincinnati-based David J. Joseph Co.; the sale of PSC Metals to California-based SA Recycling; and the purchase of Detroit-based Ferrous Processing & Trading (FPT) by steelmaker Cleveland-Cliffs. That company’s purchase of FPT also marks a further move into vertical integration for the steelmaker and direct-reduced iron producer, which said it was seeking more prime scrap.

Cleveland-Cliffs was not the only steelmaker looking to vertically integrate. BlueScope paid $240 million to acquire two sites from MetalX in Waterloo, Indiana, and Delta, Ohio, which is near BlueScope’s North Star steel mill. Both sites feature auto shredders and will enable North Star to improve the quality and quantity of obsolete scrap it uses and reduce the volume of prime scrap, according to BlueScope Managing Director and CEO Mark Vassella.

While financial terms were not disclosed for all these purchases, the consolidation story in the metals recycling sector last year consisted of many chapters and plot lines and considerable sums. The staff of Recycling Today will be watching to see what the next chapter holds.