Sims Metal, a global leader in metal recycling, announced that the company will acquire the commercial and operating assets of Pennsylvania-based Northeast Metal Traders (NEMT). The acquisition is anticipated to close in mid-April 2023. NEMT, a non-ferrous scrap metal wholesaler and broker, operates a single-scale site in Philadelphia and has extensive supplier and end-consumer relationships that stretch across the eastern United States. NEMT is one of the largest copper recyclers in the U.S. They process and sell approximately 60,000 tons of non-ferrous metal per year.
The transaction consideration implies an EV/EBITDA multiple of 4.8x on a pre-synergies basis (including estimated working capital). The NEMT acquisition is in line with the company’s growth strategy, which includes the expansion of the non-ferrous business in North America (Sims Metal North America), and the allocation of growth capital expenditure toward assets that yield a minimum post-tax internal rate of return (IRR) of 15 percent.
Furthermore, it is consistent with Sims Metal’s purpose and meets the core strategic elements of the merger and acquisition framework – targeting businesses with operations in large markets, operating best-in-class assets with robust sales channels to an expanding customer base, and producing high-quality differentiated outputs. Disciplined capital allocation remains a focus for the business, and Sims Metal intends to fund this acquisition through recycling surplus and/or underperforming capital.
“We are very excited about this bolt-on acquisition and the opportunities it opens up for the Sims Metal North America business,” said Alistair Field, managing director and chief executive officer of Sims Limited. “The Northeast brings commercial and operating synergies, as well as provides us with a significant and complementary footprint in Philadelphia.”
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Author: PR Newswire