Aussie metals giant creates new firm with Anaheim scrapper
Metals recycler Sims Group Ltd. said Friday it will merge its Southern Californian Metal Recycling assets with those of Anaheim-based scrap reclaimer Adams Steel LLC.
The merger agreement will create a new entity, SA Recycling LLC, which will be owned 50 percent by Richmond-based SGL subsidiary Simsmetal West LLC and 50 percent by Adams.
The new SAR will operate within a territory encompassing Southern California, Arizona, Southern Nevada and Northern Mexico.
The merger will combine Sims’ deepwater facility at the Port of Los Angeles with Adams Steel’s two inland shredding operations and network of inland feeder yards. The new business will be run by George Adams, current president of Adams Steel, who will report to a board comprising of eight directors, four nominated by Sims and four by Adams Steel. A nominee of Sims will serve as chairman of SAR and Sims will also nominate its CFO.
The combined business is expected to handle more than 2 million tons of ferrous scrap and nearly 100,000 tons of non-ferrous scrap, with revenues in excess of $600 million.
The merger, which is subject to the notification and waiting period requirements of the U.S. Hart-Scott-Rodino Antitrust Improvements Act, will involve no cash transactions. Sims’ investment in SAR will be equity accounted. The majority of ferrous material arising from the new entity will be sold to Sims Group Global Trade Corporation under a third-party sales agreement. SAR anticipates having its own standalone banking facilities to finance working capital and growth.
Headquartered in Australia, SGL earns more than 70 percent of its $5 billion per year in revenue from international operations in the United Kingdom, Continental Europe, North America, New Zealand and Asia. Publicly traded on the Australian Stock Exchange, SGL employs more than 3,500 workers worldwide.