Schnitzer Steel (SCHN) – Get Report shares fell Tuesday, after the recycled metal maker announced an agreement to buy assets from Columbus Recycling in the Southeast.
Financial terms weren’t disclosed. Columbus Recycling provides metal recycling products and services.
Purchasers in corporate acquisitions often see their stock price fall because of the money that have to shell out in the deal.
Portland-based Schnitzer on Tuesday traded at $52.04, down 3%.
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Schnitzer agreed to acquire eight of Columbus’ operating facilities in Mississippi, Tennessee, and Kentucky. The transaction is expected to close during the first quarter of Schnitzer’s 2022 fiscal year, subject to regulatory approvals.
Founded in 1956, Columbus Recycling purchases and processes scrap metal from industrial manufacturers, local recycling companies and individuals, and sells the recycled products to regional foundries and steel mills.
“Combined with Schnitzer’s nine existing facilities in Georgia, Alabama, and Tennessee, the acquired operations will offer additional recycling products, services, and logistics solutions to customers and suppliers across the Southeast, a region that is expected to see a significant increase in electric arc furnace steelmaking capacity in the coming years,” Schnitzer said.
In the 12 months through May, Columbus registered sales volumes of approximately 300,000 ferrous tons, which, on a pro-forma basis, would increase Schnitzer’s total ferrous volumes by approximately 7% over the same period, Schnitzer said.
It also announced the successful restart of production at its Cascade Steel Rolling Mills in McMinnville, Ore. Earlier this week, Cascade restarted production after replacement and repairs of property and equipment at the mill’s melt shop that had been lost or damaged by a fire on May 22.